FEDERAL COURT OF AUSTRALIA Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited [2012] FCAFC 31 Citation: Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited [2012] FCAFC 31 Appeal from: Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd [2011] FCA 522 Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd (No 2) [2011] FCA 966 Parties: PROPELL NATIONAL VALUERS (WA) PTY LTD (ACN 009 455 056) and TRAVIS COLEMAN v AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) and SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) File number(s): WAD 209 of 2011 WAD 376 of 2011 Judges: STONE, COLLIER AND GILMOUR JJ Date of judgment: 20 March 2012 Catchwords: TRADE PRACTICES – misleading or deceptive conduct – negligence – duty of valuers to third party financial institution – expert evidence – whether trial judge ought to have disregarded evidence of sales subsequent to valuation date in determining liability – relevance of authorities accepting evidence of subsequent sale – whether competent valuers could have, using the comparable sales methodology, ascribed relevant value – whether trial judge erred in fact in finding properties comparable – personal liability of employee – whether principles articulated in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 applicable in Australia – requisite knowledge of accessory to contravention of the Trade Practices Act 1974 (Cth) – third party reliance upon misleading or deceptive conduct – whether evidence of agency relationship TRUSTS – whether trustee entitled to commence proceedings if losses to trusts funds – whether trustee required to plead that it had suffered a recoverable loss – power of trustee to commence proceedings on behalf of trust COSTS – indemnity costs – discretion – whether trial judge erred in testing the reasonableness of offer of compromise – whether trial judge had regard to subsequent findings after trial Legislation: Arbitration Act 1902 (NSW) Federal Court of Australia Act 1976 (Cth) s 43 Land Tax Assessment Act 1910 (Cth) Lands Acquisition Act 1906 (Cth) Property Law Act 1974 (Qld) s 85 Town Planning and Development Act 1928 (WA) Trade Practices Act 1974 (Cth) ss 52, 75B, 82 Cases cited: Adwell Holdings Pty Ltd v Mark Smith [2003] NSWCA 103 cited Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 cited Astonland Pty Ltd v HTW Valuers (Central Qld) Pty Ltd [2002] QCA 302 cited Australian Mutual Provident Society v Overseas Telecommunications Commission (Aust) [1972] 2 NSWLR 806 cited Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd [2011] FCA 522 cited Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd (No 2) [2011] FCA 966 cited Australian Mutual Provident Society v Overseas Telecommunications Commission (Australia) [1972] 2 NSWLR 806 cited Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 cited Commonwealth v Arklay (1952) 87 CLR 159 cited Corisand Investments Ltd v Druce & Co (1978) 248 EG 315 cited Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299 cited Executors of the Will of Panagiotis Samios Deceased v Commissioner of Taxation (1972) 22 The Valuer 324 cited Federal Commission of Taxation v St Helens Farm (ACT) Proprietary Limited (1981) 146 CLR 336 cited Finishing Services Pty Ltd v Lactos Fresh Pty Ltd (2007) ANZ ConvR 93 cited Fitzgerald Enterprises (WA) Pty Ltd v Bob Slight's Boat School Pty Ltd [2009] WADC 50 cited Frewin v Emmdale Sports Club Inc [2003] NSWSC 108 cited Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429 cited Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (2011) 281 ALR 1 cited Great Wall Resources Pty Ltd v O'Sullivan [2009] NSWCA 119 cited Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 cited Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 cited House v R (1936) 55 CLR 499 cited Housing Commission of New South Wales v Falconer (1981) 1 NSWLR 547 cited HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 cited IFTC Broking Services Limited v Commissioner of Taxation (2010) 268 ALR 1 cited Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2003] 1 Qd R 26 cited Jasmine Glen Pty Ltd v Falkirk Nominees Pty Ltd (Administrator Appointed) formerly trading as Australian Property Consultants [2006] WASC 49 cited John Bridge Ltd (in liquidation) v Commonwealth of Australia (1951) 11 The Valuer 375 cited Karenlee Nominees Pty Ltd v Gollin & Co Ltd [1983] 1 VR 657 cited Kelly v Western Australian Planning Commission [2007] WASCA 160 cited Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 cited L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 cited McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 cited Medical Benefits Fund of Australia Limited v Cassidy (2003) 135 FCR 1 cited Mercedes Holdings Pty Limited v Waters (No 2) (2010) 186 FCR 450 cited MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313 cited Mutual Life & Citizens Assurance Co Ltd v Evatt (1980) 122 CLR 556 cited Mutual Life & Citizens Assurance Co Ltd v Evatt (1980) 122 CLR 628 cited Re Bradberry, National Provincial Bank Ltd v Bradberry (1943) Ch 35 cited Sablebrook Pty Ltd v Credit Union Australia Ltd [2008] QSC 242 cited Singer & Friedlander Ltd v John D Wood & Co (1977) 10 LDAB 30 cited Spencer v The Commonwealth (1907) 5 CLR 418 cited Tepko Pty Ltd v Water Board (2001) 206 CLR 1 cited Western Australian Planning Commission v Kelly [2007] WASCA 160 cited Wheeler Grace v Pierucci Pty Ltd (1989) 16 IPR 189 cited Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 cited Yorke v Lucas (1985) 158 CLR 661 cited Young v Murphy [1996] 1 VR 279 cited Date of hearing: 25 November 2011 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 174 WAD 209 OF 2011 and WAD 376 OF 2011 Counsel for the First and Second Appellants: Mr PG McGowan Solicitor for the First and Second Appellants: DLA Piper Australia Counsel for the First and Second Respondents: Mr J Simpkins SC Solicitor for the First and Second Respondents: Gadens Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 209 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) PTY LTD (ACN 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent JUDGES: STONE, COLLIER AND GILMOUR JJ DATE OF ORDER: 20 MARCH 2012 WHERE MADE: sydney (VIA VIDEO LINK to perth) THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellants pay the respondents' costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 376 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) PTY LTD (ACN 009 455 056) AND TRAVIS COLEMAN First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent JUDGES: STONE, COLLIER AND GILMOUR JJ DATE OF ORDER: 20 MARCH 2012 WHERE MADE: sydney (VIA VIDEO LINK TO PERTH) THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellants pay the respondents' costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 209 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) pty ltd (aCn 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 376 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) pty ltd (aCn 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent JUDGES: STONE, COLLIER AND GILMOUR JJ DATE: 20 MARCH 2012 PLACE: SYDNEY (VIA VIDEO LINK TO PERTH) REASONS FOR JUDGMENT STONE J: 1 I have had the advantage of reading, in draft, the reasons for judgment of Collier J. I agree with her Honour's proposed orders and the reasons for those orders. I wish, however, to make some further observations in relation to the first ground of appeal which concerns the relevance of events subsequent to the date of valuation. 2 In my view the flaw in the appellants' submissions is that they have misunderstood the reasons of the primary judge and this has led them to ask the wrong question. As set out in the amended notice of appeal filed on 8 June 2011 the first ground states: The Trial Judge erred in law in finding [121] that it was impermissible, when determining the value of a property at a specific earlier time, to have regard to sales of properties comparable to the subject property that were sold subsequent to the Valuation Date, and in consequence erred in law in finding that the expert opinion of Mr Kish must be disregarded or discounted to the extent that he had regard to subsequent sales in determining the value of the Property at 3 April 2007. 3 In fact the finding made by the trial judge at [121] of his reasons was quite different from that attributed to him by the appellants. His Honour said: … in my view, it is impermissible, in conducting a valuation for the purposes of the s 52 proceeding and the negligence proceedings in the proceedings now before the Court, for the Court to take into account sales subsequent to 3 April 2007 for the purpose of deciding these competence and representational issues. Similarly, it is not open to the expert witnesses to have regard to such subsequent sales and, to the extent that Mr Kish has done so, his expert opinion must be disregarded or discounted. [Emphasis added] 4 The appellants have failed to distinguish between the two questions, each of which may be relevant in a valuation context but only one of which was relevant to the appeal. These questions are: 1. What was the true value of the land at the valuation date? 2. Was the valuation given at the valuation date misleading or deceptive (s 52) or arrived at negligently? 5 The difference between the two questions can be simply illustrated. Assume that Smith's land was compulsorily acquired on, say, 3 April 2007. A valuer, Jones, is asked in June 2008 to provide a valuation of Smith's land as at the acquisition date for the purpose of determining the amount of compensation to be given to Smith. In preparing his opinion as to the value of the land on 3 April 2007, Jones would need to consider sales of comparable properties on and around the date of acquisition. The sale of a comparable property on 5 April 2007 would be relevant and a competent valuer would take that sale into account. 6 Assume that another valuer, Thomas, is asked to provide a valuation for the purpose of considering whether Jones' valuation given on 30 June 2008 was negligent and contained a misleading representation as to the value of Smith's land. The question put to Thomas, the purpose in obtaining his valuation, is quite different from the question put to Jones. In determining whether Jones was negligent in his valuation the question is not, what was the true value of the land on 3 April 2007. It is a question about how Jones prepared his valuation and that being so sales that occurred after the date of Jones' valuation cannot be relevant. 7 The question put to Smith was question 1, for Thomas it was question 2. The question put to the learned primary judge was question 2. The appeal assumes that it was question 1. 8 It is clear from his reasons that the primary judge was aware of this distinction. At [115] of his reasons his Honour, referring to the decision of the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, said that the High Court "pointed out that in many fields of law, assessments of compensation or value at one date are commonly made taking account of all matters known by the later date when the Court's assessment is being carried out". His Honour noted, at [118], however that when it came to valuations that had previously been made the High Court accepted, at [44], that, [the valuer] had to take account of the risks so far as the market perceived them to be present realities at the date at which value was to be fixed. That task of valuation is to be conducted "without hindsight" – that is, without knowledge of events which have not happened by the date at which the value is to be ascribed … His Honour added at [119]: The decision of the High Court in HTW Valuers demonstrates why, in some circumstances, hindsight can be and, indeed, must be regarded in determining questions of damage or loss where the question of lost value arises …But hindsight has no place in an action concerning the competency of a valuation of land at a certain point in time for the purposes of the law of negligence or for the purposes of an action founded on breach of s 52 of the TP Act. 9 His Honour correctly identified the question raised in the proceeding before him and, in my view, correctly and clearly answered it. Consistent with HTW Valuers the task of assessing Mr Coleman's valuation was to be conducted without hindsight and consequently his Honour was correct disregarding the opinion of Mr Kish ted to the extent that it took into account sales subsequent to 3 April 2007. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. Associate: Dated: 20 March 2012 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 209 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) PTY LTD (ACN 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 376 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) PTY LTD (ACN 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent JUDGES: STONE, COLLIER AND GILMOUR JJ DATE: 20 March 2012 PLACE: sydney (via video link to perth) REASONS FOR JUDGMENT collier J: 10 Before the Court are appeals from two related decisions delivered by a Judge of the Federal Court in Perth on 18 May 2011 and 22 August 2011. In both appeals, the appellants were respondents in the proceedings below. 11 The appellants are valuers, who prepared a valuation in respect of a property at 95 Curtin Avenue, Cottesloe, Western Australia (95 Curtin Avenue). The valuation was prepared in connection with an application for refinancing by a person (Mr Michael Pell) who is not a party to these proceedings, and who offered 95 Curtin Avenue as security. In the primary judgment of 18 May 2011 (Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd [2011] FCA 522) ("the Primary Judgment"), his Honour found that representations made by the appellants in the valuation as to the value of 95 Curtin Avenue were misleading and deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (Trade Practices Act), and in breach of the duty of care the appellants owed the respondents to prepare the valuation with due care and skill. His Honour assessed damages payable at $405,682.15 plus pre-judgment interest, and ordered that costs follow the event. 12 Following delivery of judgment, his Honour ordered, inter alia, that the parties file and serve material relating to the basis on which the respondents' costs arising from the Primary Judgment ought be taxed. In a decision published 22 August 2011 (Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd (No 2) [2011] FCA 966) (the Costs Judgment) his Honour held that, in the circumstances, costs were to be taxed on a party and party basis up to and including 15 February 2011 and on an indemnity basis from 16 February 2011. 13 The appellants have appealed against the whole of the Primary Judgment on the following grounds: 1. The Trial Judge erred in law in finding [121] that it was impermissible, when determining the value of a property at a specific earlier time, to have regard to sales of properties comparable to the subject properties comparable to the subject property that were sold subsequent to the Valuation Date, and in consequence erred in law in finding that the expert opinion of Mr Kish must be disregarded or discounted to the extent that he had regard to subsequent sales in determining the value of the Property at 3 April 2007 2. The Trial Judge, having accepted the expert opinion of Mr Kish [138-141] as to the state of the Cottesloe property market in years 2006 and 2007, erred in fact in failing to apply that finding when determining the value of the subject property at the 3 April 2007 [142], [158], [160] 3. The Trial Judge erred in fact by treating the sale of 65 Curtin Avenue in June 2006 as broadly comparable when determining the value of the subject property at 3 April 2007 4. The Trial Judge erred in fact by determining [161] that the property at S/L 1, 197 Curtin Avenue, Cottesloe was very comparable to the subject property. 5. The Trial Judge erred in law in finding: 5.1 [189] that the Second Appellant owed a duty of care to the Respondents when valuing the subject property. 5.2 [197] that the Second Appellant was knowingly concerned in the contravention of section 52 of the Trade Practices Act, in failing to find that the Second Respondent knew that any act on his part was misleading or deceptive 6. The Trial Judge erred in law by inferring that the first respondent relied upon the valuation supplied by the appellants [227], 6.1 The Trial Judge failed to give sufficient reasons as to the basis for drawing that inference. 7. The Trial Judge erred law in determining [238] that the first respondent suffered the loss claimed 7.1 The Trial Judge failed to give reasons in response to, or to consider the appellants' submission at trial that there was no evidence that the first respondent, which was suing in its own name and not as trustee on behalf of the beneficiaries of a trust, had suffered a loss in the transaction the subject of proceedings. 14 The appellants have appealed against the whole of the Costs Judgment on the following grounds: 1. The Trial Judge erred in law, when testing the reasonableness of the Appellants' conduct in not accepting the Respondents' offer of compromise (Offer) [30], by having regard to findings which: 1.1 Were subsequently made at trial; and 1.2 Had not been made at the date of the expiration of the Offer. 2. The Trial Judge erred in law in finding [30] that valuation evidence using sales data post-dating the valuation date was always bound to fail. 3. The Trial Judge erred in law and in fact in finding [30] that, in absence of any direct evidence, it was logical to conclude that the Respondents would rely upon the Appellants' valuation and that loss would result. 3.1 The Trial Judge failed to give sufficient reasons for the drawing of any such inference. 4. The Trial Judge erred in law and in fact in finding [30] that the Appellants, as at the date of the expiration of the Offer, lacked real prospects of success at trial. 4.1 The Trial Judge failed to give reasons in response to, or to consider, the Appellants' submission that he was not limited to considering the evidence of Mr Hughes and Mr Kish in determining the data of the subject property. 4.2 The Trial Judge failed to give reasons in response to, or to consider the Appellants' submission that the information available at the expiry of the Offer was not adequate to enable them to adequately assess the reasonableness of the Offer. 15 Before turning to these grounds of appeal it is useful to summarise relevant background facts. I have taken the following facts substantially from the judgments below. The Facts 16 At the hearing before his Honour the only relief sought was by the first appellant ("AET"). AET sought damages under s 82 of the Trade Practices Act and damages at common law. 17 The first respondent ("Propell") carried on business as a valuer. The second respondent (Mr Coleman) was employed by Propell as a licensed valuer in Western Australia. 18 On or about 20 April 2007 the second respondent ("Seiza") received a loan application from Mr Michael Pell. The stated purpose of the loan application was, in part, to refinance an existing mortgage with another entity, Mortgage Ezy Pty Ltd ("Mortgage Ezy") over property located at 95 Curtin Avenue in the sum of $1.2 million. Mr Pell's loan application included a copy of a valuation for 95 Curtin Avenue dated 3 April 2007 addressed to Mortgage Ezy, which had been issued by Propell and signed by Mr Coleman. 19 An officer of Seiza – Mr Dean Italila – recommended approval of a loan subject to a valuation report. 20 By a "pre-approval" letter dated 26 April 2007, AET (on the face of the letter, by its agent "Mortgage Ezy Pty Ltd – Qld") notified Mr Pell that, among other things, a valuation report was required. Propell was then reinstructed by Mr Pell to prepare a new valuation. Mr Coleman visited 95 Curtin Avenue and satisfied himself that it was in the same condition as when he had completed the valuation on 3 April 2007. 21 A new valuation was issued by Propell, signed by Mr Coleman, on 7 May 2007. That valuation contained a representation that the market value of 95 Curtin Avenue as at 3 April 2007 was $1.6 million. 22 His Honour observed that Mr Coleman accepted, in the course of evidence, that the 7 May 2007 valuation was issued with the intention or expectation that the appellants could rely on it for the purposes of assessing and approving 95 Curtin Avenue as security for a loan (at [9]). 23 On or about 7 May 2007 AET made a written offer to Mr Pell for a principal loan advance of $1.2 million to refinance his existing loan over the subject property, as well as $20,650 for fees payable by Mr Pell on settlement of the loan. The loan was to be a "Residential Lo Doc 4 Year Cash Flow Manager Loan", secured by way of first registered mortgage over 95 Curtin Avenue. His Honour observed that a consequence of this arrangement was that Mr Pell's repayment obligations did not require repayment of principal, and required payment of less interest than would actually accrue, during the first four years of the loan (at [12]). 24 Mr Pell accepted the loan offer, and on 25 May 2007 AET advanced the sum of $1,220,650 to Mr Pell. 25 It is not in dispute that Mr Pell subsequently defaulted on the loan, and was eventually declared bankrupt. AET commenced proceedings for possession of 95 Curtin Avenue, obtained judgment and entered into possession in October 2009. 26 AET sold 95 Curtin Avenue as mortgagee in possession by public auction in February 2010 for the sale price of $980,000. The proceeds of sale were insufficient to extinguish the loan obligation of Mr Pell. AET calculated its loss as at 4 June 2010 in the sum of $407,739.15 and claimed, as trustee for the loans and mortgage written under Seiza's lending program, that amount as damages together with interest thereon and costs. 27 Before the trial judge AET and Seiza claimed in summary: The valuation issued by Propell to Seiza contained representations that 95 Curtin Avenue represented acceptable security for the provision of a mortgage by AET and Seiza. Those representations were false or incorrect because as at 3 April 2007 the market value of the subject property was only $1,030,500, not $1.6 million. The representations were not based on a reasonable degree of professional skill and care. Propell was primarily liable for its contravention of the Trade Practices Act as well as vicariously liable for the negligence of Mr Coleman. Mr Coleman was also liable for the contravention of the Trade Practices Act. 28 In summary Propell and Mr Coleman claimed that: the valuations did not contain representations which were false and misleading; the representations were not negligent; Mr Coleman was not a party to making false and misleading representations; AET and Seiza did not rely on those representations and suffer loss; and AET and Seiza did not adequately mitigate any such loss. Findings of his Honour in the Primary Judgment and the Costs Judgment 29 In summary, his Honour made the following findings in the Primary Judgment. 30 It was common ground before his Honour that a margin of 15% error above market value was permissible in respect of a valuation and would not constitute misleading or deceptive conduct by the valuer or a breach of duty of care. His Honour accepted this proposition. 31 In relation to the question whether representations were false or misleading and the valuation negligently prepared, his Honour observed that Mr Coleman's valuation relied upon seven comparable sales (at [30]). His Honour examined Mr Coleman's evidence in detail, as well as expert valuation evidence of Mr Ross Hughes (called by AET and Seiza) and Mr Steve Kish (called by Propell and Mr Coleman), and the joint statement produced by Mr Hughes and Mr Kish. 32 His Honour noted that the primary question which Mr Hughes and Mr Kish disputed was whether it was permissible, for the purposes of the hearing, for a valuer to have regard to subsequent sales in expressing an opinion as to the value of 95 Curtin Avenue as at 3 April 2007. His Honour accepted the opinion of Mr Hughes that it was inappropriate to take account of subsequent sales, because the task before the Court was to assess whether, upon the sales evidence available as of 3 April 2007, a competent valuer could have, using the comparable sales methodology, ascribed a value of $1,600,000 to 95 Curtin Avenue (at [100]-[101]). In so finding his Honour distinguished the decision of Williams J in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax of the Commonwealth of Australia (1943) 7 The Valuer 299) and that of the Court of Appeal of New South Wales in Great Wall Resources Pty Ltd v O'Sullivan [2009] NSWCA 119. His Honour also discussed in detail the decision of the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 and concluded: [119] The decision of the High Court in HTW Valuers demonstrates why, in some circumstances, hindsight can be and, indeed, must be regarded in determining questions of damage or loss where the question of lost value arises and, it might be added, in the particular statutory circumstances in Daandine, unimproved value of land. But hindsight has no place in an action concerning the competency of a valuation of land at a certain point in time for the purposes of the law of negligence or for the purposes of an action founded on breach of s 52 of the TP Act. [120] The point can finally be demonstrated in a rather simple way. In order to determine whether Mr Coleman negligently prepared his valuation as of 3 April 2007, or by his valuation misled or deceived the applicants as to the true value of the property at the time they relied on it for mortgage security purposes, it is of no relevance to say that, with the benefit of hindsight, it turns out that the applicants got good value. To say that is to say nothing about whether, at the material time, the valuation provided was prepared in accordance with due skill or misrepresented the position as to the value of the subject property to a person, such as the applicants in this case, who relied on that report for mortgage security purposes, at the time assuming it was based on sound valuation principles. The judgment that needs to be made by the Court in this regard can only be relevantly assisted by a valuation made after the event that itself takes into account the relevant sales evidence that was available to a competent valuer as at the material date of valuation. [121] In these circumstances, in my view, it is impermissible, in conducting a valuation for the purposes of the s52 proceeding and the negligence proceedings in the proceedings now before the Court, for the Court to take into account sales subsequent to 3 April 2007 for the purpose of deciding these competence and representational issues. Similarly, it is not open to the expert witnesses to have regard to such subsequent sales and, to the extent that Mr Kish has done so, his expert opinion must be disregarded or discounted. 33 His Honour observed that the expert witnesses had agreed that the prime valuation methodology should be based on the evidence provided by sales of comparable properties, however the experts could not agree on the precise approach to analysis of the sales evidence. While his Honour accepted that the prime valuation methodology should be based on the evidence provided by sales of comparable properties, his Honour did not accept the approach whereby comparable properties included subsequent sales. However, his Honour also rejected the approach of adopting as a mandatory valuation methodology or analysis a unit of comparison based on rate per square metre, preferring a process of weighing comparable properties by overall comparison with 95 Curtin Avenue ([136]-[137]). 34 In relation to the question of when the market trend peaked, his Honour preferred the evidence of Mr Kish to the effect that the market experienced strong growth or at least did not shrink through to early 2007 and then steadied (at [141]). In doing so his Honour rejected the expert evidence of Mr Hughes that the market peaked at June 2006 (at [141], [148]). 35 His Honour examined in detail comparable sales the subject of expert evidence. On the basis that his Honour excluded sales subsequent to the valuation date of 3 April 2007, his Honour considered only two comparable sales on the list of properties analysed by Mr Kish. In relation to comparable sales analysed by Mr Hughes, his Honour considered that sales from as early as January/February 2006, and even up to April 2006, were not susceptible to reliable adjustments in such a buoyant market and should not be used for comparative purposes ([146]-[148]). His Honour was prepared to accept valuations from June 2006 ([150]). His Honour also disregarded properties which were sufficiently superior to 95 Curtin Avenue as not to be comparable ([155]). Accordingly, in the circumstances his Honour considered ([158]) that the only sales which should be regarded in assessing value were: 65 Curtin Avenue, Cottesloe; 86A Grant Street, Cottesloe; S/L 1. 197 Curtin Avenue, Cottesloe. 36 In light of these considerations, his Honour concluded as follows: [163] In my view a competent valuer would have valued the subject property as of 3 April 2007 in the sum of $1,200,000. Allowing a generous 15% tolerance above this sum, a valuation of up to $1,350,000 might be acceptable in the sense that one would not consider such a representation as to value misleading or deceptive or the valuation negligently prepared. [164] However I consider a valuation of the subject property of $1,600,000 a gross over-valuation. I therefore find such a representation of value in the respondents' valuation of 3 April 2007 to be both misleading and deceptive and in breach of the respondents' duty of care and skill owed to the applicants. 37 In relation to Mr Coleman's contention that the valuation made by Mr Coleman was commissioned by Propell directly (and not from Mr Coleman), that it was published by Propell and not Mr Coleman, and that Mr Coleman did not owe a duty of care to AET and Seiza in respect of the valuation, his Honour considered authorities upon which Mr Coleman relied, in particular statements of Lord Steyn in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830. In light of principles relevant to negligent misstatement articulated in such cases as Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, Mutual Life & Citizens Assurance Co Ltd v Evatt (1980) 122 CLR 628 and Tepko Pty Ltd v Water Board (2001) 206 CLR 1, his Honour considered that unless there was some other, narrowing principle excluding a person such as an employed licensed valuer in a case like this from owing such a duty, there was no reason to conclude other than that Mr Coleman owed a duty of care at common law to AET and Seiza ([178]). His Honour considered that, for the purposes of Australian law, the finding in Williams was explicable by the facts as found ([185]). In respect of whether Mr Coleman owed a duty of care, his Honour found as follows: [186] In my view, having regard to all relevant aspects of the dealings between the parties – the dealings involving the respondent Mr Coleman, as a licensed valuer, and the applicants, in the sense that Mr Coleman knew who he was actually preparing the valuation for and that Mr Coleman knew the report he agreed would be relied upon by them for mortgage security purposes – Mr Coleman should be taken as owing a duty of care to the applicants in respect of the valuation he produced and knew his employer, Propell, would be providing to them. [187] Accordingly, I reject the submission made on behalf of Mr Coleman that he did not owe the applicants any relevant duty. [188] To the extent that, in Williams, the English House of Lords considered that a defendant director owed no duty of care to the plaintiff in respect of the conduct of the company of which he was a director in Williams, that decision plainly turns on its own facts. [189] I find, therefore, that at material times Mr Coleman owed a duty of care for the purposes of the law of negligence to the applicants. 38 In relation to whether Mr Coleman was involved in the contravention within the meaning of s 75B of the Trade Practices Act, his Honour accepted the submission of AET and Seiza that, on the evidence before the Court, Mr Coleman admitted that he prepared the valuation with the intention that it could be relied on by AET and Seiza. In his Honour's view, Mr Coleman was directly and knowingly concerned in the making of the representation that the market value of 95 Curtin Avenue at 3 April 2007 was $1,600,000 (at [196]-[197]). 39 In relation to the question of reliance, AET and Seiza submitted that Seiza relied upon the representations in the valuation in assessing and approving the loan, and Seiza assessed and approved the loan on behalf of, and as agent for, AET. Propell and Mr Coleman challenged the alleged reliance, and submitted that no evidence was led from AET to this effect, or that AET ever acted on Mr Coleman's valuation. In his Honour's view, however, the evidence before the Court supported an inference on the balance of probabilities that AET and Seiza had relied on the valuation (at [201]). 40 Finally, his Honour was satisfied that AET had suffered the loss it claimed, and that AET and Seiza took reasonable steps to mitigate their loss in all the circumstances. 41 Subsequently, the parties filed and served submissions and evidence upon which they relied in relation to the basis on which the costs of AET and Seiza were to be assessed. This issue was determined by his Honour on the papers without a further hearing. 42 AET and Seiza sought orders in the following terms: Propell and Mr Coleman pay the costs of AET and Seiza to be taxed on a party and party basis, if not agreed, up to and including 15 February 2011; and Propell and Mr Coleman pay the costs of AET and Seiza to be taxed on an indemnity basis from 16 February 2011. 43 AET and Seiza claimed that they had made an offer of genuine compromise ("the Offer") to Propell and Mr Coleman on 16 February 2011, and that the rejection of that offer was unreasonable. AET and Seiza relied on the principles articulated in Calderbank v Calderbank [1975] 3 All ER 333. 44 Propell and Mr Coleman contended that it had been reasonable for them to reject the offer of compromise, and that in the circumstances costs ought to be awarded against them on a party and party basis for the entirety of the proceedings. 45 His Honour observed that an award of indemnity costs may properly be awarded where there is an imprudent refusal of an offer to compromise, however it did not follow that a party who was unsuccessful at trial was liable to pay indemnity costs merely on the basis that it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer ([13], [15]). His Honour explained that the factors to which the Court could have regard in determining whether the rejection of an offer was unreasonable did not constitute an exhaustive list, although a number of relevant factors were listed in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 including the unsuccessful party's prospects of success as at the date of the offer and the time allowed to the unsuccessful party to consider the offer. 46 In the circumstances his Honour was satisfied that the rejection of the Offer was unreasonable, and that AET and Seiza were entitled to an order for indemnity costs after 16 February 2011. Accordingly his Honour made orders in terms proposed by those parties. 47 In light of these facts and findings, I now turn to the grounds of appeal before this Court. The Primary Judgment – Grounds of appeal The Primary Judgment: Ground of Appeal 1 48 In the circumstances of this case his Honour considered that he should not have regard to sales of property comparable to 95 Curtin Avenue which took place after 3 April 2007. In summary, the appellants submit that: A relevant consideration in determining whether a property valuation has been prepared negligently and/or is misleading and deceptive is what the market value of the property was at the date of the valuation. his Honour erred in finding that sales after the date of valuation ought be disregarded, because the preponderance of authorities supports the proposition that, in determining market value, a Court may have regard to subsequent sales of comparable properties. to the extent that his Honour cited HTW Valuers as authority for a contrary proposition, his Honour erred. His Honour erroneously conflated the issues of: whether the relevant valuation was prepared with due care and skill; and whether the valuation can be said to be so far from the true market value of the property that a prima facie case of negligence is established and, on that fact alone, the valuation is misleading and deceptive. 49 The appellants rely on a lengthy list of cases to support their position, commencing with the decision of Williams J in Daandine and including: Sablebrook Pty Ltd v Credit Union Australia Ltd [2008] QSC 242 at [123]; Karenlee Nominees Pty Ltd v Gollin & Co Ltd [1983] 1 VR 657 at 668; AMP Society v OTC (Aust) [1972] 2 NSWLR 806 at 823-824; Executors of the Will of Panagiotis Samios Deceased v Commissioner of Taxation (1972) 22 The Valuer 324 at 328; John Bridge Ltd (in liquidation) v Commonwealth of Australia (1951) 11 The Valuer 375; Commonwealth v Arklay (1952) 87 CLR 159 at 170; Housing Commission of New South Wales v Falconer (1981) 1 NSWLR 547 at 576; Kelly v Western Australian Planning Commission [2007] WASCA 160 at [393]. 50 These cases are important in the context of these appeals, not only because the appellants rely heavily on them in respect of the first ground of appeal from the Primary Judgment, but also because the appellants point to their strength as authorities for the purposes of their appeal from his Honour's decision in the Costs Judgment. Accordingly, before turning to his Honour's decision and the appellants' submissions it is instructive to examine the cases upon which the appellants rely. Daandine 51 Daandine involved three appeals by the appellant, the Daandine Pastoral Company Pty Ltd, against amended assessments for land tax under the provisions of the Land Tax Assessment Act 1910 (Cth) in respect of the years ending 30 June 1939, 1940 and 1941, upon farming land in Queensland. For each year the Deputy Commissioner of Taxes assessed the appellant upon an unimproved value of 21/- per acre. The appellant contended that this value was excessive, and that the true unimproved value was 15/- per acre. 52 Justice Williams considered in great detail the nature of improvements that had been made to the relevant land. His Honour then turned (at page 303) to sales of properties which, in his Honour's view, appeared to afford some assistance in arriving at the value of Daandine Station on 30 June 1939. 53 Of particular interest for the purposes of the present litigation are the following comments of his Honour at page 304: It is unfortunate that Mr Allen believed that he could not take into account any sales made after 30th June, 1939. Values must be calculated in the light of circumstances which existed on the material date, in this case 30th June, 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sale would not be comparable and would be useless. But if on the material date there was a tendency in a district to closer settlement and for prices to rise, subsequent sales of property in subdivision at rising prices would be evidence in support of the view that it was correct to value land in the district suitable for subdivision which was being applied for some other purpose in the light of this potential value. The whole tendency of the Courts is to admit evidence of any events prior to the date of trial which will throw any real light on the issues. See the authorities referred to in the judgment of my brother rich in Tonking v Australian Apple and Pear Marketing Board, 66 CLR at p 108; see also In re Bradberry, 167 LT 396 at p 400. In Federal Commissioner of Land Tax v Duncan, 19 CLR 551, the whole contention of the Commissioner was that sales of the subject land subsequent in date to that upon which it had been valued showed that the original valuation was too low and ought to be increased. 54 The appellants in the proceedings before this Court submitted that, in light of Daandine, subsequent sales may be considered to the extent that they can assist in determining the market value of property, and may be of particular assistance if the market has not materially changed between the date on which the market value is to be assessed and the date of the subsequent sale. Sablebrook 55 In Sablebrook Pty Ltd v Credit Union Australia Ltd [2008] QSC 242 the defendant in April 2003 exercised its power of sale as mortgagee over land owned by the plaintiff at Hervey Bay in Queensland. It sold land by a contract dated 28 April 2003 for $240,000 without advertising the sale. The contract price exceeded a valuation of $225,000 the defendant had obtained in December 2002. The plaintiff claimed that the defendant had breached its statutory duty imposed by s 85 of the Property Law Act 1974 (Qld) to take reasonable care to ensure that the land was sold at market value, which in the plaintiff's submission was $450,000. The plaintiff relied on evidence to the effect that there had been significant increases in market values in Hervey Bay in late 2002 and early 2003. Further, the plaintiff claimed that the defendant breached its duty of failing to take reasonable steps to ensure that the property was sold at its market value because it failed to obtain a valuation at or about the date of entry into the contract with purchasers. The plaintiff submitted that the December 2002 valuation upon which the defendant relied was out of date and by the date of sale not reflective of the true market value. 56 Justice Applegarth found that the failure of the defendant to obtain an updated valuation and its failure to put the property to market constituted a breach of its statutory duty as mortgagee exercising its power of sale. His Honour then turned to the question of identifying the relevant market value for the purposes of s 85, including the appropriate use of evidence of sales that occurred after 28 April 2003 in arriving at a market value of the property as at 28 April 2003. In doing so his Honour made the following observation: [122] …Sablebrook was critical of Mr Peach and Mr Olive in not having regard to subsequent sales. Reliance was placed by it upon a passage in The Commonwealth of Australia v Arklay… that "the best evidence of [market value] is that of comparable sales of other land either before or after the date of acquisition but this evidence is often not available". In Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax… Williams J stated: Values must be calculated in the light of circumstances which existed on the material date ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter conditions previously existing, the subsequent sales would not be comparable and would be useless ... The whole tendency of the courts is to admit evidence of any events prior to the date of trial which throw any real light on the issues. [123] The authorities establish that sales after the relevant date can be taken into account in order to arrive at the market value of the subject property, but that supervening events which alter conditions that existed at the relevant date may mean that subsequent sales are not comparable and little or no use can be made of them. In this case, the proper use of evidence of sales either before or after 28 April 2003 required consideration to the circumstances of those sales, including movements in the market. Karenlee 57 In Karenlee Nominees Pty Ltd v Gollin & Co Ltd [1983] 1 VR 657 a landlord had let to a tenant premises for a term of eight years at a rental price of $12,000 per month for the first three years and thereafter to be agreed or determined in accordance with a rent review clause. The clause provided that, in the event of disagreement, the rent should be determined on the mean of two sworn valuations (provided by two separate valuers, appointed by each of the landlord and tenant) provided the rental would not be less than $144,000 per annum. After the expiration of the first three years the parties entered negotiations but could not agree. Valuations were sought and obtained by each of the landlord and tenant, including a valuation obtained by the tenant but not disclosed. The tenant sought an injunction restraining the landlord from petitioning for its winding up on the basis of unpaid rent owing, and the landlord counterclaimed for sums representing the additional rental. At first instance the Court granted the injunction and dismissed the landlord's counterclaim. 58 The landlord successfully appealed to the Full Court. At 667 the Court noted: The remaining issue is whether the Jepson valuation is valid. The learned trial Judge rejected it. Its author was heavily attacked in cross-examination. The learned trial Judge plainly considered some of his answers unsatisfactory, and there are grounds for criticizing his reasoning. In his judgment, the Judge listed nine criticisms of the valuation. One of these related to the use of evidence of sales after 29 September 1977, as comparable sales. The Judge accepted Mr Eastwood's opinion that these were irrelevant, but that is a conclusion involving opinion upon fact, and not involving admissibility. It can be seen elsewhere in the judgment that the Judge appreciated that they were permissible material for use, subject to their being capable of description as comparable, and, as with prior or contemporary sales, subject to adjustment to allow for aspects in which they were not comparable. In the case of subsequent sales, market fluctuations may have to be compensated for: see Federal Commissioner of Land Tax v Duncan (1915) 19 CLR 551. The weight to be attached to any materials in a valuation case depends a good deal on what other materials are available, and there is no sign of a wealth of contemporary material in the present case: cf. Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax, per Williams, J, cited in Collins, Valuation, Compensation and Land Tax, 3rd ed., p 64. 59 Further, at 671 their Honours said: There was, in our opinion, no issue in the case as to the true valuation, and the Court was not a valuation court. It is sufficient to say that the criticisms enumerated by his Honour were not such as to establish "mistake" as that word was intended to be understood by Sir John Romilly, MR in Collier v Mason…. We therefore conclude that his Honour was wrong in rejecting the Jepson valuation. AMP Society v OTC (Aust) 60 Australian Mutual Provident Society v Overseas Telecommunications Commission (Australia) [1972] 2 NSWLR 806 similarly involved a dispute in respect of rent review. The relevant lease provided that if the parties had not agreed upon a rental for a rental period the rent would be 10% less than the "fair annual market rent" of the premises, that is to say the "best annual rental" that, in the opinion of two valuers, one appointed by each party, could reasonably be obtained for the premises. The parties could not agree on rental, nor could the valuers appointed. A case was stated for the Court pursuant to the Arbitration Act 1902 (NSW), based upon certain agreed facts, as to what was a fair annual market rental. At 823 Hutley JA referred to McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at 16 where Williams J said: Values must be calculated in the light of circumstances which existed on the material date… but subsequent events can be taken in to account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless. But if on the material date there was a tendency in a district to closer settlement and for prices to rise, subsequent sales of property in subdivision at rising prices would be evidence in support of the view that it was correct to value land in the district suitable for subdivision which was being applied for some other purpose in the light of this potential value. The whole tendency of the courts is to admit evidence of any events prior to the date of trial which will throw any real light on the issues. 61 Hutley JA observed further that a similar rule had been laid down in regard to valuation of annuities, and referred to Re Bradberry, National Provincial Bank Ltd v Bradberry (1943) Ch 35 at 41. His Honour also noted, however principles relevant to valuations of land in the case of resumption, in particular comments of Isaacs J in Spencer v The Commonwealth (1907) 5 CLR 418 at 440 to the effect that all circumstances arising subsequent to the relevant date are to be ignored, and whether the land becomes more valuable or less valuable afterwards is immaterial. Panagiotis Samios 62 In Executors of the Will of Panagiotis Samios Deceased v Commissioner of Taxation (1972) 22 The Valuer 324, the key fact was that Mr Samios had died in August 1966, leaving real property in the city of Brisbane in his estate. On 13 December 1969 the Deputy Commissioner of Taxation issued a Notice of Assessment for the purposes of Commonwealth estate duty. It was common ground between the parties that the material date for assessing duty payable was the date of death of the deceased owner. However in light of comments of Williams J in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at 16, Skerman J accepted that subsequent sales could be taken into account in order to determine the proper weight to attach to such circumstances unless supervening events occur which render such sales dissimilar. In this case it appeared that, at the date of death, the relevant land was in the process of being sold to a large retailer for car parking purposes, subject to the receipt of City Council approval. The trustees of the estate contended that a supervening event had occurred rendering later sales irrelevant – namely the approval of the Council – and it was this event which had resulted in an inflated price of the land. At 328 his Honour said: I have to determine what was the 'real value' of the land on the relevant date. Having regard to the circumstance that as at this date no expropriation of the land took place, to the power of postponing realization of the property of the deceased under his will, and the other considerations I have herein before adverted to, I can see no sufficient reason why I should not take into consideration what in fact did happen at no remote period subsequent to the relevant date as affording the best evidence of its value as at that date. 63 Accordingly, his Honour concluded that the Commissioner could in all the circumstances properly adopt the sale price as the value of the subject land as at the date of death of the deceased. John Bridge 64 In John Bridge Ltd (in liquidation) v Commonwealth of Australia (1951) 11 The Valuer 375 the plaintiff sought compensation for compulsory acquisition of land by the Commonwealth. At 377 Williams J observed that: … evidence of prices paid for comparable lands, not only before but after the critical date is admissible, the weight of the evidence varying with the distance in time of the comparable sale from the critical date. Prices or future sales, not too remote in time, might well be within the range of forecast at the critical date, not being prices obtained during a period of unexpected prosperity or depression. Commonwealth v Arklay 65 In Commonwealth v Arklay (1952) 87 CLR 159 at 170 the plaintiff sought compensation from the Commonwealth in respect of the acquisition of her land on 12 December 1946. Under the Lands Acquisition Act 1906 (Cth) the value of the land was required to be assessed according to its value on 1 January last preceding the date of acquisition. The key issue for consideration was described by the High Court as whether, in the case of land compulsorily acquired under the legislation during a period of controls, possessing no special suitability for some particular business or activity carried on by the owner and having no added potential value if put to some better use, the assessment of compensation could exceed the highest price which the controlling authority might be expected to allow (at 169). In addressing this question, relevantly the Court observed (at 169-170) as follows: The answer to the question must depend primarily upon the meaning of the particular Act providing for compensation, in this case the Lands Acquisition Act. Section 28 (1) (a) of this Act provides that in determining the compensation regard shall be had to the value of the land acquired. It is established that "value" in such a context means the value of the land to the owner. Where the amount for which a vendor may sell and a purchaser buy is not controlled the Court poses a hypothetical problem, the answer to which supplies this value. It is a familiar rule which in Australia was authoritatively formulated in Spencer's Case (1). Shortly stated what is required is "an estimate of the price which would have been agreed upon in a voluntary bargain between a vendor and purchaser each willing to trade but neither of whom was so anxious to do so that he would overlook any ordinary business considerations": Commissioner of Succession Duties (S.A.) v. Executor Trustee & Agency Co. of South Australia Lid. (1). It is simply an analysis of what in all the relevant circumstances would be the price that a willing purchaser would have to pay a vendor willing but not anxious to sell in order to obtain the land. Where land has no special suitability for some business or activity carried on by the owner and has no added potential value if put to some better use, the value on a free market is usually its market value. The best evidence of this value is that of comparable sales of other land either before or after the date of acquisition but this evidence is often not available. Housing Commission of New South Wales v Falconer 66 In Housing Commission of New South Wales v Falconer (1981) 1 NSWLR 547 the owner of land sought compensation for compulsory resumption of that land. At 576-577 Mahoney JA observed as follows: In determining the effect which may be given to events occurring subsequently to the date of resumption, it is necessary to draw certain distinctions. There are some cases in which the theory or principle on which the compensation is to be assessed prevents regard being had to subsequent events. Thus, where the compensation which is to be given is measured by the ordinary market price of the property taken, the principle on which that market price is to be determined prevents (or at least restricts) reference to subsequent events. That market price is the price acceptable to a willing but not anxious vendor and purchaser on the relevant date. Such persons are to be taken to know what an appropriately informed person would know on that date. That being the principle, it follows that such persons (and the court, as determining what they would have done) cannot be seen as knowing more. The price which such persons would accept at that date will be affected by the uncertainties as at that date, as to, for example, the future demand for land at the relevant time, future decisions of zoning authorities, and the like. Those uncertainties and the effect of them on the postulated vendor and purchaser help to determine what price will be found acceptable. In that regard, therefore, evidence of what subsequently has occurred in relation to such matters may not ordinarily be referred to. This does not operate so as necessarily to exclude evidence of subsequent sales: Melwood Units Pty Ltd v Commissioner of Main Roads (1978) 52 ALJR 593, at pp 597, 598; [1978] 3 WLR 520, at pp 527, 529, 530; [1979] 1 All ER 161, at pp 166, 167, 168; McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1, at p 16. Such sales are evidence, not of the subsequent outcome of matters which, at the relevant date, were inherently uncertain, but of the price a relevant vendor and purchaser found acceptable at that date for comparable land. The assumption of the law is that from that evidence it is possible to infer what the relevant vendor and purchaser would have found acceptable for the subject land: see generally Harris v Minister for Public Works (NSW) (1912) 12 SR (NSW) 149, at pp 161-4; 29 WN 33; reversed 14 CLR 721; McDonald v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 231, at p 239. But, in my opinion, the amounts here in question (the increased building costs) are in a different position. These amounts are not recovered as part of the ordinary market price of the land. It has been suggested in cases such as those to which I have referred, that there may be involved in an award of compensation, amounts of at least three different kinds: the ordinary or primary market value of the property taken; the market value of property which has a special potential for appropriate purchasers; and an amount which is given to the dispossessed owner (whether called disturbance or by some other name) because of the special value which the property has for him as owner of it. (The distinction between these three is illustrated in the judgments in Horn v Sunderland Corporation [1941] 2 KB 26.) The amounts here in question are of the third kind. Amounts of this kind are not given because they are part of the market price of the land: see the Birmingham Corporation case [1970] AC 874, at p 896, per Lord Reid; see generally Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459, at pp 491, 492. If this be so, then the reasons which, in the case of market price compensation restrict reference to subsequent events, do not apply. As a general rule, the courts prefer facts to prophecy, particularly if the prophecy is based on artificial assumptions, and it is therefore necessary to consider whether there are any other reasons why, in quantifying the amounts here in question, the courts should not have regard to events subsequent to the resumption. Western Australian Planning Commission v Kelly 67 In Western Australian Planning Commission v Kelly [2007] WASCA 160 the plaintiff was the registered proprietor of rural land, and applied for approval to commence development on the land. The application was refused. This refusal gave the plaintiff the right to claim compensation for injurious affection under the Town Planning and Development Act 1928 (WA). The plaintiff did so, which in turn enlivened the defendant's right under the legislation to acquire that part of the land reserved for the purposes of parks and recreation. The defendant exercised this right. The Act provided that the value of the relevant land would be the value thereof on the date the Commission elected to acquire the land, and that value would be determined by the Court. 68 In assessing the value of the land, the trial Judge relied on comparable sales to determine its value. Consideration "Bracket" 69 The appellants submit that: a relevant consideration in determining whether a property valuation has been prepared negligently and/or is misleading and deceptive is the market value of the property at the date of the valuation; and if the valuation is within 10% (or on occasion within 15%) of the market value, this is prima facie evidence that it is not tainted by negligence and is not misleading or deceptive. 70 The appellants rely on Singer & Friedlander Ltd v John D Wood & Co (1977) 10 LDAB 30, Adwell Holdings Pty Ltd v Mark Smith [2003] NSWCA 103 at [9] and MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313 at 356 in support of this proposition. 71 In my view this submission is not controversial to the extent that, in light of the element of uncertainty in respect of valuations, the Courts recognise a "bracket" within which a valuation may fall. As Watkins J observed in Singer & Friedlander at 574: The valuation of land by trained, competent and careful men is a task which rarely, if ever, admits of precise conclusion. Often beyond certain well-founded facts so many imponderables confront the valuer that he is obliged to proceed on the basis of assumptions. Therefore, he cannot be faulted for achieving a result which does not admit of some degree of error. Thus, two able and experienced men, each confronted with the same task, might come to different conclusions without any one being justified in saying that either of them has lacked competence and reasonable care, still less integrity in doing his work. The permissible margin of error is said by Mr Dean, and agreed by Mr Ross, to be generally 10 per cent either side of a figure which can be said to be the right figure, ie so I am informed, not a figure which later, with hindsight, proves to be right but which at the time of valuation is the figure which a competent, careful and experienced valuer arrives at after making all the necessary inquiries and paying proper regard to the then state of the market. In exceptional circumstances the permissible margin, they say, could be extended to about 15 per cent, or a little more, either way. Any valuation falling outside what I shall call the "bracket" brings into question the competence of the valuer and the sort of care he gave to the task of valuation. 72 However the principle recognised by the Court in Singer & Friedlander simply concerns the range of tolerated variation in a reasonable valuation opinion, given the element of judgment involved. It does not raise any immutable presumption in respect of claimed negligence. As was pointed out by Meagher JA (Mason P and Buddin J agreeing) in Adwell Holdings at [9]: Since [Singer & Friedlander], judges seem to have taken a figure of 10% (or, in some cases at least, perhaps 15%) of the true figure to constitute an area, or bracket, within which, prima facie, a valuation is not negligent. But the importance of that "bracket" notion must not be misunderstood. It is not a statement of some principle that no valuation within the bracket can, as a matter of law, be negligent. That such a valuation can still be negligent is not only a matter of common sense, but has been judicially developed in such cases as Interchase Corp Ltd v ACN 010 087 573 Pty Ltd (Supreme Court, Queensland, 520 of 1994, BC 200000188) and Lion Nathan Ltd v Coca-Cola Bottlers Ltd [1996] UKPC 9; [1996] 1 WLR 1438. Once one finds that a valuation is within the "bracket", one can infer that prima facie, but only prima facie, it is not tainted by negligence; of course, it may have been arrived at by negligence, but that fact must be proved; one can never say that purely because a figure is within the "bracket", no negligence can be involved; but, on the other hand, if one arrives at a conclusion that a particular valuation is correct, one may turn to the "bracket" test as a check. Relevance of subsequent sales 73 There was no dispute in these proceedings that Propell, at least, owed a duty of care to the respondents as well as to avoid conduct in breach of s 52 of the Trade Practices Act. The appellants contend, however, that Mr Coleman does not owe such a duty (an issue I will consider later in this judgment). 74 That a duty of care resides in valuers in relation to third parties relying on a valuation is well-settled: Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, HTW Valuers. 75 His Honour described the task before the Court as being to assess whether, upon the sales evidence available as of 3 April 2007, a competent valuer could have, using the comparable sales methodology, ascribed a value of $1.6 million to 95 Curtin Avenue. In my view this description is accurate, and adopts the approach applied in other cases where the question of the duty of valuers has been considered. For example, in Corisand Investments Ltd v Druce & Co (1978) 248 EG 315 Gibson J observed that: It is common ground that the duty of care so owed was to use the ordinary skills of an ordinarily competent man exercising the particular art, and professing to have the particular skill, of a valuer of property. 76 The Court also accepted in Corisand that a guiding question for consideration as to whether the valuer had breached a duty of care was whether the valuer, in putting forward the relevant valuation, relied upon any matters upon which no competent valuer could properly rely, or failed to take into account any matters to which no competent valuer could in the circumstances fail to have regard (at 318). Similar observations were made by Watkins J in Singer & Friedlander at 603-604. 77 It lies at the heart of the valuation process that a valuer is required to make a value judgment, both metaphorically and literally, based upon the valuer's knowledge and the material before the valuer, and it is in this respect that some room for error is contemplated: cf Mason J in Federal Commission of Taxation v St Helens Farm (ACT) Proprietary Limited (1981) 146 CLR 336 at 381, Singer & Friedlander. So, in making a value judgment as to the resale value of real property, it is reasonable that the valuer have regard to comparative sales information. However it is evident that, in practice, the valuer can only have regard to comparative sales information which is available up until the time of the valuation. It follows that, in undertaking the task of assessing whether the valuer has performed his or her role in a negligent manner, or whether the valuer has conducted himself or herself in a manner contrary to s 52 of the Trade Practices Act, only comparative sales information up until the time of the valuation is relevant. It cannot follow, in determining whether a valuation was prepared in breach of duty or in a manner which was misleading or deceptive, that the Court should have regard to comparative sales information in respect of sales taking place after the date of valuation. Sales after the date of valuation, in respect of which the valuer could have no certainty of knowledge, can have no bearing on the conduct of the valuer in producing the valuation, or in the content of that valuation. That this is so was seen by reference to the following comments of the High Court in HTW Valuers at [44]: In carrying out valuations, [the valuer] had to take account of risks so far as the market perceived them to be present realities at the date at which value was to be fixed. The task of valuation is to be conducted without hindsight - that is, without knowledge of events which have not happened by the date at which the value is to be ascribed, though they have happened by the date on which the valuation takes place. That task is different from the task of assessing loss, because the latter task is to be conducted with hindsight. (Emphasis added.) 78 Similarly in Singer & Friedlander (upon which the appellants also relied) the judge accepted the proposition that a permissible margin of error may be allowed in respect of the figure which: can be said to be the right figure, i.e. so I am informed, not a figure which later, with hindsight, proves to be right but which at the time of valuation is the figure which a competent, careful and experienced valuer arrives at after making all the necessary inquiries and paying proper regard to the then state of the market. (at 574) (Emphasis added.) 79 I note that Singer & Friedlander involved a claim by a merchant bank against a valuer for an allegedly negligent valuation of development land. The learned judge in Singer & Friedlander continued at 574: The way in which a valuer should conduct himself so as to fulfil his duty to a merchant bank, or any other body or person, varies according to the complexity or otherwise of the task which confronts him. In some instances the necessary inquiries and other investigations preceding a valuation need only be on a modest scale. In others a study of the problem needs to be in greater depth, involving much detailed and painstaking inquiries at many sources of information. In every case the valuer, having gathered all the vital information, is expected to be sufficiently skilful so as to enable himself to interpret the facts, to make indispensable assumptions and to employ a well-practised professional method of reaching a conclusion; and it may be to check that conclusion with another reached as the result of the use of a second well-practised method… 80 The comments in both HTW and Singer & Friedlander focus on the task undertaken by the valuer and the valuation produced in light of the exercise of the valuer's judgment. Where a claim relates to the conduct of the valuer at a particular time, which conduct is relevant in respect of a claim for negligence or in respect of s 52 of the Trade Practices Act, later events are of no relevance. In this case the question was whether, as at 3 April 2007, a competent valuer could have ascribed a value of $1.6 million or thereabouts to 95 Curtin Avenue. Expert evidence in these proceedings was only relevant in respect of that question, and hindsight played no part. 81 None of the cases to which the appellants refer, commencing chronologically with Daandine, supports the proposition that in determining a claim pursuant to s 52 of the Trade Practices Act and for breach of duty in respect of a sales valuation, the Court ought have regard to evidence of subsequent comparable sales. In all of the cases upon which the appellants relied the relevant issue for determination was the actual value of the land at the particular date, allowing the benefit of hindsight, and not the competency of a valuation ascribing a value to that land. It was in that context that subsequent sales were relevant. Therefore: In Daandine the question for determination was the actual value of the land at the relevant time for land tax purposes. A similar issue was addressed by the Court in Panagiotis Samios, but in respect of assessment of estate duty. In Sablebrook key questions were whether the failure of the defendant to obtain an updated valuation and to put the property to market constituted a breach of its statutory duty, and it was in that light that the actual value of the property at the time of sale required determination. In Karenlee and AMP Society v OTC valuations for the purposes of rental had been conducted. In both cases the Court permitted evidence of subsequent sales to determine the actual value of the relevant properties for rental purposes. Further, and significantly, in AMP Society v OTC the Court considered that evidence of subsequent sales was consistent with information already before the valuer of increasing subdivision in the area and supportive of the approach taken in the valuation. In John Bridge, Commonwealth v Arklay, Housing Commission of New South Wales v Falconer and Western Australian Planning Commission v Kelly the Court was required to determine the actual value of land at the time of compulsory resumption for the purposes of assessing compensation payable. 82 In my view, at [100]-[101] of the Primary Judgment his Honour correctly identified the issue for decision and accurately articulated relevant principles. 83 The first ground of appeal in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 2 84 In the second ground of appeal the appellants claim that the trial judge failed to have regard to the state of the property market when determining the value of 95 Curtin Avenue as at 3 April 2007. In summary, the appellants submit: The trial judge at [138]-[141] of the Primary Judgment accepted the opinion of the appellants' valuation expert, Mr Kish, that the Cottesloe property market experienced very strong growth from the beginning of 2006 to early 2007, before steadying in early to mid 2007. However, the trial judge subsequently contradicted that determination in his reasons for decision: at [142] where his Honour stated that "there was some steadying or weakening of the market in the latter part of 2006 and into early 2007"; at [158] where his Honour determined the value of 95 Curtin Avenue by comparing it to properties that had sold prior to the date of valuation, and adjusting the sale prices of those properties to account for "the steadying of the market as of late 2006/early 2007"; at [160] where his Honour stated that the Cottesloe property market was steady as at January 2007. 85 Clearly his Honour accepted the evidence of Mr Kish that the Cottesloe property market experienced strong growth or at least did not shrink through to early 2007 and then steadied (at [141]). It is difficult to identify any way in which his Honour contradicted himself in the manner submitted by the appellants. 86 At [142] the trial judge stated his view that the relevant sales were in a market which was not plateauing, but rather were sales in a still buoyant market, and that "plainly there was some steadying or weakening of the market in the latter part of 2006 and into early 2007 and continuing as at the valuation date". Reading [142] carefully, I am unable to see how it advances a conclusion incompatible with observations of his Honour at [141]. 87 In relation to [158], his Honour found that: …subject to appropriate adjustments being made, by reason both of the age of a sale, the steadying of the market as of late 2006/early 2007, as well as other adjustments to be made on account of size and other attributes of the property or other detriments… only certain sales should be regarded as assessing value. This statement is not inconsistent with [141]. The same position exists in relation to his Honour's reference to the "steadying market" at [160] of the Primary Judgment. The submission of the respondents that it is a misconception to regard the trial judge as finding anything other than that there was a steadying in early 2007 is, in my view, correct. 88 The second ground of appeal in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 3 89 In their third ground of appeal the appellants criticise the trial judge for treating the sale of 65 Curtin Avenue in June 2006 as broadly comparable when determining the value of 95 Curtin Avenue as at 3 April 2007. In particular, the appellants submit that, on the basis of evidence lead at the trial that the average annual increase in the value of property in the Cottesloe property market between September 2006 and June 2007 was 40.7% (which was accepted by his Honour at [140]), the sale of 65 Curtin Avenue was not reasonably comparable when valuing 95 Curtin Avenue. 90 The property at 65 Curtin Avenue was considered at different points throughout the Primary Judgment. In particular: at [55] his Honour noted that Mr Hughes, the respondents' expert witness, considered the sale of the property was relevant for comparative purposes. at [93] his Honour noted that Mr Kish, the appellants' expert witness, considered that the sale 65 Curtin Avenue should not be used for comparative purposes because it was dated and, whilst acknowledged to be a fair comparison, was not superior to 95 Curtin Avenue. at [150] his Honour said he would include sales evidence in respect of 65 Curtin Avenue notwithstanding Mr Kish's views, on the basis that it was sufficiently recent to provide some guidance on a valuation setting where there was otherwise a marked paucity of sales evidence. at [157] and [158] his Honour identified 65 Curtin Avenue as being a "broadly comparable sale, in the circumstances of a valuation as at 3 April 2007, subject to appropriate adjustments being made". 91 At [159] his Honour concluded: The property at 65 Curtin Avenue should be considered superior to the subject property for the reasons supplied by Mr Hughes. It sold for $1,275,000 in June 2006, a period when the market was quite buoyant and, in my view, not then past its peak. The fact that this property is plainly superior, as I accept it is, needs to be taken into account when considering this broadly comparable sale. I would consider that the subject property would not exceed the value of 65 Curtin Avenue as at 3 April 2007, all those things considered. 92 In this case I note that: his Honour clearly qualified the use of sales evidence relating to 65 Curtin Avenue as "broadly comparable"; his Honour observed that the use of the evidence was in light of the paucity of relevant sales evidence; and while his Honour considered that sales evidence in relation to 65 Curtin Avenue could provide some guidance, his Honour also used evidence from other sales to support his conclusions (in particular 86A Grant Street Cottesloe). To that extent, I do not consider that any issues arising from the elapse of time between the sales of 65 Curtin Avenue and 95 Curtin Avenue were such as to render his Honour's conclusions unsound. 93 The third ground of appeal in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 4 94 In their fourth ground of appeal the appellants criticise the trial judge for treating the sale of S/L 1 197 Curtin Avenue in June 2007 as very comparable when determining the value of 95 Curtin Avenue as at 3 April 2007. In particular, the appellants submit that the trial judge failed to consider that this property was opposite a high voltage power station and was a survey strata lot. 95 The property S/L 1 197 Curtin Avenue was considered at different points throughout the Primary Judgment. In particular: At [74] his Honour noted that Mr Kish had referred to the sale of the property for comparative purposes with 95 Curtin Avenue, but described it as "not as good". At [84] his Honour noted Mr Hughes' view that the "most comparable" of the current sales selected by Mr Kish was S/L 1 197 Curtin Avenue in February 2007 at $1,070,000, but which had been totally discarded by Mr Kish. At [97] his Honour noted that Mr Hughes had expressed the opinion that the sale of S/L 1 197 Curtin Avenue was very comparable and a relevant indicator to the value of 95 Curtin Avenue, and disagreed with the opinion of Mr Kish that the property was "Not as good" as 95 Curtin Avenue. At [143] his Honour noted in relation to the sales identified by Mr Kish as comparable, that after discarding sales subsequent to the valuation date, only two remained on Mr Kish's list (of which one was S/L 1 197 Curtin Avenue). At [145] his Honour noted that, despite the disagreement between the experts as to whether S/L 1 197 Curtin Avenue was "as good as" 95 Curtin Avenue, both experts agreed that the property was relevant and his Honour accepted that view. At [157] and [158] his Honour identified S/L 1 197 Curtin Avenue as being a "broadly comparable sale, in the circumstances of a valuation as at 3 April 2007, subject to appropriate adjustments being made". 96 At [161] his Honour concluded: The property at S/L 1, 197 Curtin Avenue, Cottesloe, albeit that it is of a strata lot, must be considered very comparable. While Mr Kish has commented on its inferior location and its superior improvements and considers it "not as good" as the subject property, it is in my view an important comparable sale. It is in Curtin Avenue. However, it does not have rear access, but it is a corner location. It is larger in area – 642m2 compared with 458m2. Mr Kish considered this property "Not as good". All things taken into account, it should be considered around the same value as the subject property, perhaps a lower value. Its sale for $1,070,000 in January 2007, three months before the valuation date, when the market was settling, suggests the subject property has a value a little higher than this sale. 97 There is no reference in the Primary Judgment to the characteristics relating to the proximity of the power station and the nature of the lot, and which the appellants submit his Honour did not take into consideration. However there is no evidence before the Court to support an inference that these characteristics were explored or pressed, either in evidence or submissions at the hearing before his Honour. Indeed when questioned in respect of this issue at the hearing of this appeal, Counsel for the appellants was required to seek instructions and only after some investigation by his instructing solicitors was he able to draw the attention of the Court to the fact that Mr Kish had made reference to the "electrical substation" opposite the property (Transcipt, 25 November 2011 p 41 ll 1-11). 98 Further, as submitted by Counsel for the respondents in this appeal, notwithstanding the reference to inferior characteristics of S/L 1 197 Curtin Avenue in evidence of Mr Kish, there was evidence before his Honour that both expert valuers considered S/L 1 197 Curtin Avenue a property comparable with 95 Curtin Avenue. 99 The fourth ground of appeal in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 5.1 100 In this ground of appeal the appellants claim that the trial judge erred in law in finding that Mr Coleman owed a duty of care to the respondents when valuing 95 Curtin Avenue. In summary, the appellants submit: some special circumstances must exist to establish that an employee of an entity retained to provide advice owed a personal duty of care. no special circumstances existed in the present matter that would make it reasonable to assign to Mr Coleman personal responsibility. It is not sufficient to establish a personal duty of care that the employee knew that the work being done by him or her, on behalf of the employer, would be relied upon by a third party; and authorities to support the position of Mr Coleman are Williams, Frewin v Emmdale Sports Club Inc [2003] NSWSC 108 and Fitzgerald Enterprises (WA) Pty Ltd v Bob Slight's Boat School Pty Ltd [2009] WADC 50. Authorities relied on by the appellants 101 Before turning to his Honour's decision, it is useful to consider the authorities upon which the appellants rely in respect of this ground of appeal. Williams v Natural Life Health Foods Ltd 102 In Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 the defendant company had been incorporated by its managing director, Mr Mistlin, in order to franchise the concept of retail health food shops under the name "Natural Life Health Foods". The company produced a brochure by which it held itself out as having the necessary expertise to provide reliable advice to franchisees. The brochure emphasised that the expertise derived from Mr Mistlin's experience in the industry. The plaintiffs approached the company with a view to obtaining a franchise. The company produced detailed financial projections for the plaintiffs. It was clear that Mr Mistlin had played a prominent part in the production of the projections, although the plaintiffs did not have any material precontractual dealings with him. The plaintiffs entered into a franchise agreement with the defendant company, however the business traded at a loss over the following eighteen months and eventually ceased trading. The plaintiffs sued both the defendant company and Mr Mistlin for damages representing the financial loss they suffered as a result of the negligent advice they had received. Both the trial judge and the Court of Appeal held that the defendant company and Mr Mistlin were liable. Mr Mistlin appealed to the House of Lords. 103 The House of Lords unanimously allowed the appeal. 104 Lord Steyn, delivering the lead judgment, reiterated the principles originally developed in Hedley Byrne. His Lordship then turned to the operation of this principle in the context of directors of companies and said: It will be recalled that Waite LJ took the view that in the context of directors of companies the general principle must not 'set at naught' the protection of limited liability. In Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517 at 524 Cooke P (now Lord Cooke of Thorndon) expressed a very similar view. It is clear what they meant. What matters is not that the liability of the shareholders of a company is limited but that a company is a separate entity, distinct from its directors, servants or other agents. The trader who incorporates a company to which he transfers his business creates a legal person on whose behalf he may afterwards act as director. For present purposes, his position is the same as if he had sold his business to another individual and agreed to act on his behalf. Thus the issue in this case is not peculiar to companies. Whether the principal is a company or a natural person, someone acting on his behalf may incur personal liability in tort as well as imposing vicarious or attributed liability upon his principal. But in order to establish personal liability under the principle of Hedley Byrne, which requires the existence of a special relationship between plaintiff and tortfeasor, it is not sufficient that there should have been a special relationship with the principal. There must have been an assumption of responsibility such as to create a special relationship with the director or employee himself. (581-582) 105 Later his Lordship continued: In the present case a triangular position is under consideration: the prospective franchisees, the franchisor company, and the director. In such a case where the personal liability of the director is in question, the internal arrangements between a director and his company cannot be the foundation of a director's personal liability in tort. The inquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees… (at 582) 106 In this case Lord Steyn found that the mere facts that Mr Mistlin owned and controlled the defendant company, and that the defendant company's brochure made clear that its expertise derived from Mr Mistlin's experience, were insufficient to make Mr Mistlin personally liable to the plaintiffs. There were no exchanges or conduct crossing the line which could have conveyed to the plaintiffs that Mr Mistlin was willing to assume personal responsibility to them, and no evidence that the plaintiffs believed that Mr Mistlin was undertaking personal responsibility to them. Frewin v Emmdale Sports Club Inc 107 In Frewin v Emmdale Sports Club Inc [2003] NSWSC 108 a Master of the Supreme Court of New South Wales ordered summary dismissal of proceedings against individual directors and officers of the first defendant, a sporting club operating a race track at which the plaintiff was injured. In considering the claim of injury to the plaintiff by the alleged negligence of the first defendant and its servants or agents, Master Harrison made the following observation: 26 The defendants referred to Williams & Anor v Natural Life Health Foods Limited & Anor [1998] UKHL 17; 2 All ER 577 and Agius v State of New South Wales [2001] NSWCA 371. In Williams the House of Lords considered whether a director of a franchise company is personally liable to franchisees for the loss which they suffered as a result of negligent advice given to them by the franchisor company. Lord Steyn stated at 582 that: In such a case where the personal liability of the director is in question the internal arrangements between a director and his company cannot be the foundation of a director's personal liability in tort. The enquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees. 108 The learned Master then discussed Agius and said: 35 In relation to the case before me, even if the first and second defendants duties of care were concurrent and identical there is nothing pleaded to suggest that any of the committee members were "hands on" managers responsible for the conduct of the race day. It is not pleaded that they had particular knowledge of the danger of not erecting an outside barrier. Nothing further is pleaded as to their individual knowledge if the state of the racetrack and the performance of the tasks on the racetrack. Hence it is my view that the FASC as currently pleaded is doomed to fail as against the second defendants. Fitzgerald Enterprises 109 Finally in Fitzgerald Enterprises (WA) Pty Ltd v Bob Slight's Boat School Pty Ltd [2009] WADC 50, in similar circumstances to those before the House of Lords in Williams, Schoombee DCJ applied the reasoning in Williams. In that case the facts were similar to those in Williams, namely financial projections had been produced by the defendant company in respect of a proposed franchise to be acquired by the plaintiff, and the plaintiff business traded at a loss. The Court found that the personal defendants who were, respectively, the managing director, employees, and a representative of the defendant company, did not personally owe a duty of care to the plaintiff in light of principles explained in Williams. I note in particular her Honour's reasoning at [167]-[170]. Findings of his Honour below 110 In considering the question of personal liability of Mr Coleman, his Honour explained rules ordinarily governing the law of negligent misstatement in Australia ([171]-[174]). In particular, his Honour reiterated principles articulated by Barwick CJ in Mutual Life & Citizens Assurance Co Ltd v Evatt (1980) 122 CLR 556 at 571, later affirmed in the High Court decision L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 at 250 and 253 and in Tepko. In summary, those principles (as rephrased by Gleeson CJ and Gummow and Hayne JJ in Tepko at [47]) were: 1. The speaker must realise or the circumstances be such that he ought to have realised that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence; and 2. The circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker. 111 In considering these points in the context of these proceedings, his Honour formed the view that, in terms of the first point of Barwick CJ, Mr Coleman, as the licensed valuer employed by Propell, who prepared and signed the valuation, fully realised that AET and Seiza (who were named as the intended recipients of the valuation) would rely upon the valuation for the purposes of considering the loan application of Mr Pell ([176]). In terms of the second point made by Barwick CJ, his Honour concluded that there was no doubt on the facts that it was reasonable for AET and Seiza to rely upon the statements made in the valuation, and that this too was well understood by Mr Coleman ([177]). 112 In light of these findings his Honour found that, unless there was some other, narrowing principle that excludes a person such as an employed licensed valuer in a case such as that before the Court from owing a duty, there was no reason to conclude otherwise than that Mr Coleman owed a duty of care at common law to AET and Seiza ([178]). His Honour considered the principles articulated by the House of Lords in Williams, however he concluded that: In Australia there is no special category of liability known as "assumption of liability" [182]. "Assumption of liability" in Williams appeared related to comments of Lord Devlin in Hedley Byrne at 528-529 [182]. The finding in Williams is explicable by the facts as found, that neither the director nor anybody on his behalf conveyed directly or indirectly to the prospective franchisees that the director assumed personal liability towards them or otherwise did anything else upon which a duty of care could be established [185]. The language of "assumption of liability" must be seen as another way of saying that, in the particular circumstances of a negligent misstatement case, a defendant owed a duty of care to a plaintiff [185]. Having regard to all relevant aspects of the dealings between the parties – the dealings involving Mr Coleman, as a licensed valuer, and the respondents, in the sense that Mr Coleman knew who he was actually preparing the valuation for and that Mr Coleman knew the report he agreed would be relied upon by them for mortgage security purposes – Mr Coleman should be taken as owing a duty of care to the respondents in respect of the valuation he produced and knew Propell would be providing to them [186]. At all material times Mr Coleman owed a duty of care for the purposes of the law of negligence to the respondents. Consideration 113 While ground 5.1 was in no way abandoned, nonetheless at the hearing of the appeal the appellants were content to rely upon their brief written submissions. To that extent, this Court has not had the benefit of comprehensive argument on a potentially complex point, namely whether the principles articulated by the House of Lords in Williams represents the law in Australia in relation to the duty of care of an employee of a principal to a third party for negligent misstatement. 114 Further, while the appellants rely on two Australian decisions where Williams was applied – that is, Frewin and Fitzgerald Enterprises – there are clearly other decisions where courts have remained unconvinced that Williams was applicable in this country. Two examples are Jasmine Glen Pty Ltd v Falkirk Nominees Pty Ltd (Administrator Appointed) formerly trading as Australian Property Consultants [2006] WASC 49 at [24]-[27] and Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2003] 1 Qd R 26 per McMurdo P at [9] and McPherson JA at [77]. I note in particular comments of McPherson JA in Interchase where his Honour observed in relation to Williams: [77] … I have some serious misgivings about that decision as well as others in which it has been followed. Hillier Parker was held liable to Interchase in tort because Mr Waghorn was personally negligent in carrying out his valuation of the Myer Centre, for which Hillier Parker as his employer or principal was in law vicariously responsible to Interchase. Vicarious liability proceeds on the footing that the individual wrongdoer and the person who is vicariously liable are joint tortfeasors. To say that the principal or employer is legally responsible but that the actual wrongdoer is not, seems to me to be an inversion of the whole doctrine. The growing support for it in decisions outside Australia has recently been the subject of a critical examination by Mr Peter Watts in (2000) 116 LQR 525. It is fundamentally opposed to the decision of the House of Lords in Lister v Romford Ice & Cold Storage Ltd [1956] UKHL 6; [1957] AC 555, where it was held that an employer who is liable only vicariously may recover indemnity against the employee for breach of an implied term in his contract of employment that he will use reasonable care and skill in performing the duties of his employment. 115 The trial judge in this case found that, so far as the law of Australia is concerned, it may be said that the finding in Williams is explicable by the facts as found. I agree with his Honour in this respect, and share his Honour's scepticism as to the applicability of Williams for the reasons in [182]-[185] of the Primary Judgment. On the facts as found by his Honour, I can identify no error in his Honour's findings at [176]-[178] that Mr Coleman owed a duty of care at common law to the respondents. 116 Ground of appeal 5.1 in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 5.2 117 In summary, the appellants submit that his Honour erred in finding that Mr Coleman was knowingly concerned in the contravention of s 52 of the Trade Practices Act, because: The extension of liability under s 75B(a) and (c) of the Trade Practices Act required that Mr Coleman had knowledge of the acts constituting the contravention and of the circumstances which give those acts the character which s 52 defines, namely "misleading or deceptive or… likely to mislead or deceive"; and No evidence was led that Mr Coleman knew that the valuation of 95 Curtin Avenue was misleading or deceptive. 118 At [191]-[193] of the Primary Judgment his Honour discussed the principles in Yorke v Lucas (1985) 158 CLR 661, in particular comments of Brennan J at 677 that it was necessary for the individual to have knowledge of the essential elements of the contravention. Before his Honour, Counsel for Mr Coleman submitted that there was no evidence or basis for such a finding in respect of Mr Coleman. 119 The key paragraphs in the Primary Judgment are [196]-[197] where his Honour states: [196] The applicants submit that the evidence shows that Mr Coleman admits he prepared the valuation and with the intention that Seiza Mortgage Co and AET could rely on it. Therefore, by preparing the valuation he was directly and knowingly concerned in the making of the representation to the applicants that the market value of the subject property at 3 April 2007 was $1,600,000. [197] In my view, the applicants' submissions should be accepted. I have found above that the valuation of 3 April 2007 was misleading and deceptive in representing the subject property carried a value of $1,600,000 for mortgage security purposes. Mr Coleman was instrumental in the making of the representations at every step. He prepared the valuation, knew its purpose and caused it to be given to the applicants. He was aware of all the facts that gave rise to the contravention, and it was his conduct that led to the contravention. 120 In my view these findings of his Honour answer this ground of appeal. I can identify no error in these findings. 121 If the appellants' submission is that Mr Coleman could only be liable in this respect if he actually knew that the valuation was misleading or deceptive, the authorities do not support this submission. As explained by the Full Court in Wheeler Grace v Pierucci Pty Ltd (1989) 16 IPR 189 at 209: The knowledge required is not knowledge or awareness that the conduct has the capacity to mislead nor knowledge that it may be a contravention of s 52 of the Act. What must be shown to be possessed is knowledge of the elements of a contravention. See Giorgianni v R (1985) 156 CLR 473 at 481. (cf Moore J in Medical Benefits Fund of Australia Limited v Cassidy (2003) 135 FCR 1 at [15]) 122 Ground of appeal 5.2 in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 6 123 In this ground of appeal the appellants criticise his Honour for inferring that Seiza relied upon the appellants' valuation in assessing and approving the loan the subject of the proceedings as agent of AET, because there was no evidence before the Court to enable an inference as to any agency relationship between AET and Seiza to be drawn. The appellants contend further that there was no evidence that AET, being the party that made the loan the subject of the proceedings, had ever itself received or acted upon the appellants' valuation. 124 In particular, the appellants refer to the following paragraphs in his Honour's judgment: 198. The applicants' case is that Seiza Mortgage Co relied upon the representations in the valuation in assessing and approving the loan and that Seiza Mortgage Co assessed and approved the loan on behalf of, and as agent for, AET. 199. The respondents challenge the reliance claimed by the applicants and submit there is no evidence led at all from AET to this effect and no documents that it generated other than the mortgage agreement which the respondents contend merely founds the contractual basis of its arrangements with Mr Pell. Fundamentally, the respondents contend there is no evidence as to whether AET ever acted upon Mr Coleman's valuation of 3 April 2007. 200. As to the witnesses who were called in relation to documentary matters, the respondents observed that they were not themselves involved with the transaction at material times. Put shortly, the respondents say that without evidence from AET itself, an officer of AET, a director, or someone who says that they acted on behalf of AET, there is no evidence of AET or its agent having relied on the valuation. 201. While it is true to observe that the process by which the applicants sought to prove the making of the transaction and, in particular, the reliance of AET upon the valuation supplied by the respondents was limited and may have been supported by additional evidence, I am satisfied that by proper inference drawn from the evidence admitted, reliance on the valuation by the applicants is made out on the balance of probabilities. 125 In my view this ground of appeal may be briefly answered. 126 In Finishing Services Pty Ltd v Lactos Fresh Pty Ltd (2007 Anz ConvR 93 at [31] the Full Court accepted that third party reliance may cause an applicant's loss for the purposes of the Trade Practices Act. In particular, I note the following observation: 31 His Honour accepted that Lactos Fresh did not itself have to rely upon the misrepresentation in order to make a claim under s 82. The authorities accept that third party reliance may cause an applicant's loss: Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526; Haynes v Top Slice Deli Pty Ltd (1995) ATPR (Digest) P 46 – 147; McCarthy v McIntyre [1999] FCA 784…. However the authorities require there to be a 'sufficient and direct link' or a 'requisite element of proximity' in order for the section to be satisfied. 127 As to the question whether there was evidence before his Honour capable of supporting an inference that a relationship existed between Seiza and AET, there clearly was such evidence. I note in particular the following evidence of Mr Jimmy Ji-Mi Zhang in his affidavit affirmed 1 March 2011, which was clearly before his Honour: Structure of Seiza's mortgage lending business 17. Seiza operated a securitized lending program in Australia during the whole time I was employed there, and I believe (from discussions with other employees and my supervisors) that it had done so since 2005. 18. Seiza's securitized lending program involved the "bundling" of pools of mortgages into a series of separate trusts, which enabled the trustee of these trusts to borrow against the security of the mortgages at a lower interest rate than would be the case if ownership of the loans remained with Seiza. 19. AET is the trustee of the trusts into which the mortgage loans written under Seiza's lending program were bundled. Once securitized into one of the trusts, AET owns all of the individual loans. 20. The entity responsible for originating the individual mortgage loans under Seiza's lending program is Seiza Mortgages. Process for approval and settlement of loans 21. During the period of my employment, the steps taken by Seiza and its subsidiaries in approving and settling a mortgage loan were as follows. 22. Loan applications received by Seiza Morgages from mortgage brokers were reviewed by Seiza's credit staff. 23. I worked in the same office as Seiza's credit staff. Although I sat on a different floor, I would attend the floor on which Seiza's credit staff sat on a daily basis. 24. In addition to its credit staff, Seiza Mortgages also had an operations team whose roles were to ensure that all conditions for loans had been met and to arrange settlement of loans which had been approved. Justine McInerney was a person known to me as a person employed by Seiza in its operations team and Craig Balcombe was the manager of operations. 25. In the period from April 2008 to approximately July 2008 my role in arranging for the settlement of a loan was as follows: (a) Seiza Morgages' operations team would notify me in advance of the loans due to settle each day; (b) I would then contact Royal Bank of Scotland to arrange for funds to settle the loans to be deposited into AET's bank account for the Seiza trust which was used to settle loans, known as Trust C. AET maintained a separate bank account for each of the Seiza trusts forming part of Seiza's lending program, including the Trust C; (c) Once the funds were deposited into AET's bank account, I would then arrange for AET to transfer the funds to the panel solicitor appointed by Seiza Mortgages to act for Seiza Mortgages and AET in settling the loan. Once the loan funds were transferred to the panel solicitor, the panel solicitor would then draw trust account cheques to disburse the loan funds in the manner directed by the borrower. The panel solicitor would then proceed to settle the loan; (d) within 30 days of settlement of the loan, I would then arrange for the loan to be transferred from the Trust C into one of Seiza's securitized trusts, with the approval of the funders of the trust into which the loan was to be transferred. 26. In the period from October 2007 to April 2008 I prepared the correspondence with Royal Bank of Scotland and AET referred to in sub-paragraphs (b) and (c) of the preceding paragraph, for Belinda Lieu to send. 27. I was informed by Belinda Lieu and believe that Seiiza Mortgages's process for settling loans as at May 2007 was the same as described at paragraphs 22-25 above, except that Belinda Lieu carried out my role. Funding of loans 28. Seiza did not lend its own money to its mortgage customers. All of the money lent as part of Seiza's lending program was borrowed by AET from funders, or "noteholders". … 128 I note that his Honour at [238] of the Primary Judgment specifically referred to evidence of Mr Zhang as being adequate proof that AET suffered the loss it claimed. 129 I also accept the submission of the respondents that the evidence of Mr Victor Schkolnik in his affidavit sworn 11 February 2011 at [6-26], which was before his Honour, is further supportive of the existence of an agency relationship between AET and Seiza. 130 Ground of appeal 6 in respect of the Primary Judgment is not substantiated. The Primary Judgment: Ground of Appeal 7 131 In summary, the appellants submit that the evidence before his Honour established that the funds advanced under the loan the subject of these proceedings were not funds of AET, but were borrowed from various third parties. In particular, the appellants contend that the evidence demonstrates that AET was the trustee of trusts created by Resolute Capital Pty Ltd from the bundling of pools of mortgages, that AET borrowed against those pools of mortgages by issuing securities to noteholders which securities were then traded, and that any losses suffered in reliance upon representations contained in the appellants' valuation would be losses to the relevant trusts and the funders of the loan. The appellants contend further that AET did not sue in its capacity as trustee of those trusts, and no evidence was adduced to support a finding that AET had itself suffered a recoverable loss. 132 The respondents in the appeal submit in summary that, while this point was not expressly abandoned by the appellants, it was also not argued orally before his Honour by the parties. 133 It is well settled that a trustee can maintain such actions in tort as it could maintain if it were the beneficial owner of the property. Relevant principles were explained by Brooking J in Young v Murphy [1996] 1 VR 279, a case where a trustee of a trust had been replaced, and the new trustee subsequently commenced proceedings against the former trustee, and the former trustee's directors, parent company, solicitors, auditors and professional indemnity insurers. The defendants other than the former trustee challenged the new trustees' standing to sue. At 290 his Honour observed as follows: On this branch of the case the question for our consideration is whether Gobbo J erred in holding that the new trustees could maintain an action against Priestley & Morris in respect of the wrongful acts and omissions alleged to have taken place before the new trustees were appointed. The causes of action set up are for damages for breach of contract and damages in tort, the tort being alleged to have resulted in economic loss consisting in the loss or diminution of assets of the particular trust under consideration. I turn now to the applicable principles. In 1759 Lord Northington observed, "The transmutation to a trustee is the same in its consequences as the transmutation of possession without a trust; it conveys to the trustee the legal burthens, and it invests the trustee with the legal privileges": Burgess v Wheate (1759) 1 Eden 177 at 251 ; 28 ER 652. So if a third person commits a tort with respect to trust property, it is in general the trustee and not the beneficiaries who can maintain an action; but a beneficiary in possession of trust property can bring an action in tort that is available to a person in possession. The trustee can maintain such actions in tort as he could maintain if he were the beneficial owner of the property: Lewin on Trusts, 16th ed, p 220; Ford and Lee, Principles of the Law of Trusts, 2nd ed, Law Book Company, Sydney, 1990, s 147; Scott on Trusts, ss 280, 280.1, 281 and 282; Bogert, Law of Trusts and Trustees, s 594; Bogert, Handbook of the Law of Trusts, s 166; 76 Am Jur 2d, ss 678 and 680; 90 Corpus Juris Secundum, Wests, Eagan MN, s 361; 9 ALR 2d, ss 30-2; Underwood v Pennington (1877) 37 LT 320, a case of ejectment; Loxton v Moir (1914) 18 CLR 360 at 376 per Isaacs J.; Bushell v Borchard (1917) 17 SR(NSW) 370 at 374 per Gordon J (in that case the real question was whether a duty of care was owed to the beneficiaries); Uselman v Uselman (1990) 464 NW 2d 130. The beneficiaries should not be joined as parties: Scott on Trusts, s 280.7; Bogert, Law of Trusts and Trustees, s 594. (Emphasis added.) (cf comments of Perram J in Mercedes Holdings Pty Limited v Waters (No 2) (2010) 186 FCR 450 at [205]) 134 The respondents submit that it was not necessary that the proceedings be commenced by AET in its capacity as trustee. In my view this submission is correct. 135 Ground of appeal 7 in respect of the Primary Judgment is not substantiated. Appeal against Primary Judgment: Conclusion 136 As in my view none of the appellants' grounds of appeal against his Honour's decision are substantiated I consider that the appeal should be dismissed. THE COSTS JUDGMENT – GROUNDS OF APPEAL 137 Turning now to the Costs Judgment, the appellants appeal from the whole of the judgment of his Honour. Before his Honour, it appears the appellants contended that an appropriate order was that costs be awarded on a party and party basis for the entirety of the proceedings. Accordingly, the appellants appeal against the order of his Honour that they be required to pay costs on an indemnity basis from 16 February 2011. This order was in light of his Honour's finding of an unreasonable refusal by the appellants of a settlement offer made by the respondents on 16 February 2011. 138 Although the appellants' notice of appeal identifies four major grounds of appeal (and, indeed, a total of nine grounds if the sub-headings in each ground of appeal are addressed separately), those grounds of appeal can be reduced to three grounds of substance – namely that: His Honour erred in basing the indemnity costs order on his finding that appellants never had real prospects of success at trial, because of his Honour's eventual finding that the use of evidence in respect of sales postdating the valuation date was always irrelevant in determining the claims of AET and Seiza (grounds 1, 1.1, 1.2, 2, 4, 4.1 and 4.2); His Honour failed to give adequate reasons for the decision to award costs on an indemnity basis following the appellants' rejection of the respondents' offer of compromise (grounds 3.1, 4.1, 4.2); and In the absence of direct evidence, his Honour erred in concluding that the respondents would rely on the appellants' valuation and that loss would result (grounds 3 and 3.1). Consideration 139 At [12] of the Costs Judgment, the trial judge correctly explained relevant principles applicable to an order for costs on an indemnity basis. In summary: section 43 of the Federal Court of Australia Act 1976 (Cth) confers a broad discretion on the Court to award costs in proceedings; indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court exercising its discretion in that way; the Court may be justified in exercising its discretion in this manner where there is a refusal of an offer to compromise which was unreasonable, viewed in light of the circumstances at the date of offer. 140 His Honour referred to Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233 and Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121.. 141 After detailed examination of the submissions of both sets of parties, his Honour concluded that indemnity costs were warranted, for the following reasons: CONSIDERATION 30. In the circumstances I am satisfied that the rejection by the respondents of the applicants' offer was unreasonable, and that the applicants are therefore entitled to an order for costs on an indemnity basis. The extent of the compromise was substantial, particularly in circumstances where the respondents lacked real prospects of success on the trial on the findings I have made. The valuation of the property was an important aspect of the hearing, and although there were problems with both expert valuations, one only has to look at the gross over-valuation made by the respondent to assess the reasonableness of the settlement offer. I consider the respondents' contention at material times that evidence of a retrospective valuation, using sales data post-dating the valuation date, was always bound to fail. While issues of loss and reliance involved the making of inferences, it was logical to conclude that the applicants would rely upon the statements made in the valuation, and that loss would result. The terms of the offer expressed were clear, and while it did not foreshadow an application for indemnity costs in the event of the respondents rejecting the offer, this does not militate against a finding that indemnity costs ought to be awarded in the circumstances. 31. I would make orders as proposed by the applicants. 142 In reviewing a discretionary order of a judge the well-settled principles articulated by Dixon, Evatt and McTiernan JJ in House v R (1936) 55 CLR 499 at 504-505 are applicable, namely that: It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. 143 These principles were reaffirmed more recently by this Court in respect of discretionary costs orders in Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429 at [50], IFTC Broking Services Limited v Commissioner of Taxation (2010) 268 ALR 1 at [5] and Granitgard Pty Ltd v Termicide Pest Control Pty Ltd (2011) 281 ALR 1 at [110]. 144 In these proceedings the appellants claim that his Honour erred in testing the reasonableness of the appellants' rejection of the respondents' offer of compromise, by having regard to subsequent findings after trial that the appellants had no real prospect of success at the time the offer of compromise was made and to his Honour's view that the evidence in respect of sales post-dating the valuation date would always be disregarded. The appellants highlight the following sentence in his Honour's reasons at [30]: The extent of the compromise was substantial, particularly in circumstances where the respondents lacked real prospects of success on the trial on the findings I have made. (Emphasis added.) 145 However I am not persuaded that the language employed by his Honour meant otherwise than that, on the facts of the case as existed at the time of the rejection of the offer of compromise, the appellants in this appeal lacked real prospects of success at trial for the reasons that the valuation was clearly excessive and sales data postdating the date of valuation was always irrelevant in a respect of claims of negligence or breach of s 52. It is clear that his Honour took the view in paragraph 30 that the irrelevance of sales data subsequent to the date of valuation in the context of this case was obvious at the date of rejection of the offer of compromise. I am not persuaded that, in concluding that the rejection of the offer of compromise by the appellants was unreasonable, his Honour acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts, or failed to take into account some material consideration. In such circumstances, interference by an appellate court in a discretionary order for costs is not warranted. 146 The appellants also claim that his Honour failed to give adequate reasons for his conclusion that costs should be assessed on an indemnity basis. It is not in doubt that his Honour was required to give adequate reasons for his decision to award costs on an indemnity basis. However as observed by the Full Court in IFTC Broking Services Limited v Commissioner of Taxation (2010) 268 ALR 1 at [4], this does not mean that the reasons given need be elaborate, and reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it. His Honour's reasons at [30] of the Costs Judgment, while succinct, are clear. I do not consider that his Honour has failed to provide adequate reasons for the orders made. 147 For completeness, I note that I am not persuaded that grounds 3 and 3.1 of the notice of appeal are substantiated, and that the trial judge erred in concluding that the respondents would rely on the appellants' valuation and that loss would result. As the respondents have submitted, prior to the offer of compromise the appellants had the affidavits of Mr Tony Walden sworn 11 February 2011, Mr Victor Shkolnik sworn 11 February 2011, and Mr Simon Duke sworn 11 February 2011, all of which invited the Court to infer reliance. His Honour was entitled to take this evidence into account. 148 It follows that, in my view, the appellants' appeal against the Costs Judgment should be dismissed. COSTS OF THESE APPEALS 149 In respect of both appeals, the appellants have sought orders that the respondents pay the appellants' costs of the appeal and the hearing in the Court below. 150 In the circumstances however it is appropriate that the usual orders be made and costs should follow the event. The appellants should pay the costs of the respondents in both appeals. I certify that the preceding one hundred and forty-one (141) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 20 March 2012 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 209 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) pty ltd (aCn 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 376 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: PROPELL NATIONAL VALUERS (WA) pty ltd (aCn 009 455 056) First Appellant TRAVIS COLEMAN Second Appellant AND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED (ACN 007 869 794) First Respondent SEIZA MORTGAGE COMPANY PTY LTD (ACN 114 436 412) Second Respondent JUDGES: Stone, collier and Gilmour Jj DATE: 20 MARCH 2012 PLACE: SYDNEY (via video link to PERTH) REASONS FOR JUDGMENT Gilmour J: 151 I have had the benefit of reading in draft the reasons for judgment of Collier J. I have reached a different conclusion in respect of the first ground of appeal which I would uphold. It is unnecessary, therefore, for me to consider the balance of the grounds of appeal as they are tied to the effect of the merits of the first ground. Were the matter of valuation, upon which the entire case depends, to be reconsidered by the primary judge in light of these reasons he would require to do so against a wider body of comparable sales evidence. Dealing with the balance of the appellants' complaints in the present more limited context therefore serves no useful purpose. 152 The background facts are set out in the reasons for judgment of Collier J and I will not, except to the extent necessary, repeat them here. The case below 153 The primary judge awarded damages as against the appellants of $405,682.15 plus pre-judgment interest for representations contained in a valuation dated 7 May 2007 that were found to be misleading and deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the Act) and in breach of the duty of care owed to prepare the valuation with due care and skill. 154 The respondents' central case under the Act was that the appellants had represented, in a valuation provided to the second respondent on 7 May 2007 that the market value of a property at 95 Curtin Avenue, Cottesloe, Western Australia as at 3 April 2007, was $1.6 million. 155 This representation of market value was said to be falsified by reference to a number of errors alleged to have been made by the appellants but the primary allegation of falsity was that as at 3 April 2007 the property did not have a market value of $1.6 million. 156 It was then pleaded by the respondents that they relied on the valuation and that they would not have made the loan to Mr Pell had they known that the market value of the property at 3 April 2007 was only $1,030,500. 157 The case in tortious negligence rests essentially on the same allegations. The alleged breaches of care are pleaded to be exactly those failings which rendered the representations, and in particular the market valuation of $1.6 million misleading. 158 The claim for damages under the Act and in tort was identical in each case. It was varied at trial and only a claim by AET was made. It was resolved under each head on a "no transaction" basis, that is, on the basis that AET be restored to the position it would have been in had it not entered into the loan transaction. The valuation based grounds of appeal 159 Grounds 1-4 of the appeal concern the trial judge's finding that the appellants were liable to the respondents on the basis that the valuation the subject of the proceedings was not within a reasonable margin of error of the market value of the subject property at the date of the valuation. 160 The substance of the first ground is that, in determining the market value of the property as at 3 April 2007, the primary judge erred in finding in his reasons at [121] that it was impermissible, when determining such value, to have regard to sales of comparable properties which occurred subsequent to 3 April 2007 and as a consequence that the expert opinion of Mr Kish must be disregarded or discounted to the extent that he had regard to such subsequent sales. Relevance of subsequent sales evidence 161 The primary judge concluded that evidence of sales subsequent to 3 April 2007 was irrelevant to the question whether the appellants' conduct was misleading or negligent 162 A relevant but not sole consideration in determining whether a property valuation has been prepared negligently and/or is misleading and deceptive, is what the market value of the property was at the date of the valuation. If the valuation is within a bracket of 10% or even 15% of the market value, this is prima facie evidence that it is not tainted by negligence, and not misleading or deceptive: Singer & Friedlander Ltd v John D Wood & Co (1977) 243 EG 212 cited, albeit incorrectly, and approved in Adwell Holdings Pty Ltd v Mark Smith [2003] NSWCA 103. This approach does not amount to some principle that no valuation within the bracket can, as a matter of law, be negligent: Adwell Holdings at [9]. However, that question does not arise on this appeal. The finding of the primary judge at [163]-[164] was that a valuation of $1.2 million + 15% would not have been negligent. The upper end of the "bracket" was in his Honour's judgment $1.35 million. I am not certain why this figure was chosen. Using a ±15% range produces an upper figure of $1.38 million. It may simply be a typographical error. Nothing, it seems to me, turns on the difference between the two figures. His Honour found that viewed against that range, a value of $1.6 million attributed by the appellants was a gross over-valuation. It was, in other words, well outside the "bracket". 163 Ordinarily, a court, in determining the market value of a property may have regard to subsequent sales of comparable properties. In Daandine Pastoral Company Proprietary Ltd v Commissioner of Land Tax of the Commonwealth of Australia (1943) 7 The Valuer 299 at p 304 and in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at p 16, Williams J said: Values must be calculated in the light of circumstances which existed on the material date... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of subsequent sale, supervening events occur which alter conditions previously existing, the subsequent sales would not be comparable and would be useless... The whole tendency of the courts is to admit evidence of any events prior to the date of trial which throw any real light on the issues. 164 Accordingly, subsequent sales may be of particular assistance if the market has not materially changed between the date on which market value is to be assessed, and the date of the subsequent sale. The principle enunciated by Williams J has been followed in a number of cases including Sablebrook P/L v Credit Union Australia Limited [2008] QSC 242 at [121]-[123]; Karenlee Nominees Pty Ltd v Gollin & Co Ltd [1983] 1 VR 657 at 668 and Australian Mutual Provident Society v Overseas Telecommunication Commission (Australia) [1972] 2 NSWLR 806 at 823–824. 165 Likewise, in John Bridge Limited (in liquidation) v Commonwealth of Australia (1951) 11 The Valuer 375, High Court, Webb J stated (at 377) that: [E]vidence of prices paid for comparable lands, not only before but after the critical date is admissible, the weight of the evidence varying with the distance in time of the comparable sale from the critical date. 166 The question then is whether there was anything in the case below which took proof of market value out of the ordinary course. 167 The primary judge placed significant reliance upon the case of HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 ("HTW Valuers"). 168 The relevant passages from the reasons of the primary judge are as follows: [118] However, relevantly, at [44], the Court said in respect of the valuations made that the valuer had to take account of the risks so far as the market perceived them to be present realities as at the date at which the value was to be fixed. That task was to be conducted "without hindsight" – that is, without knowledge of events which have not happened by the date at which the value is to be ascribed, though they may have happened by the date at which the valuation takes place. The Court there said that this task is different from the task of assessing loss, because the latter task is to be conducted with hindsight. [119] The decision of the High Court in HTW Valuers demonstrates why, in some circumstances, hindsight can be and, indeed, must be regarded in determining questions of damage or loss where the question of lost value arises and, it might be added, in the particular statutory circumstances in Daandine, unimproved value of land. But hindsight has no place in an action concerning the competency of a valuation of land at a certain point in time for the purposes of the law of negligence or for the purposes of an action founded on breach of s 52 of the TP Act. [120] The point can finally be demonstrated in a rather simple way. In order to determine whether Mr Coleman negligently prepared his valuation as of 3 April 2007, or by his valuation misled or deceived the applicants as to the true value of the property at the time they relied on it for mortgage security purposes, it is of no relevance to say that, with the benefit of hindsight, it turns out that the applicants got good value. To say that is to say nothing about whether, at the material time, the valuation provided was prepared in accordance with due skill or misrepresented the position as to the value of the subject property to a person, such as the applicants in this case, who relied on that report for mortgage security purposes, at the time assuming it was based on sound valuation principles. The judgment that needs to be made by the Court in this regard can only be relevantly assisted by a valuation made after the event that itself takes into account the relevant sales evidence that was available to a competent valuer as at the material date of valuation. [121] In these circumstances, in my view, it is impermissible, in conducting a valuation for the purposes of the s 52 proceeding and the negligence proceedings in the proceedings now before the Court, for the Court to take into account sales subsequent to 3 April 2007 for the purpose of deciding these competence and representational issues. Similarly, it is not open to the expert witnesses to have regard to such subsequent sales and, to the extent that Mr Kish has done so, his expert opinion must be disregarded or discounted. 169 Accordingly, the primary judge concluded at [118]-[119], in effect, that whilst subsequent comparable sales might be relevant to establish loss or damage in this case, they were not relevant or admissible to counter the allegations of misleading conduct or negligence. I do not, with respect, agree. So far as concerned liability under the Act or for tortious negligence HTW Valuers, unlike this case, was not a case concerning a misleading or negligent valuation. Rather, it was a case where the valuer was held liable under the Act and in tort for failing to qualify his opinion: Astonland Pty Ltd v HTW Valuers (Central Qld) Pty Ltd [2002] QCA 302 at [18]. The High Court, on appeal, also pointed up that important distinction: HTW Valuers at [22]. One can readily appreciate the importance of the distinction. A valuer who failed to qualify their opinion by reference to risks then known in the market could not, by reason of such failure, be judged to have engaged in misleading and deceptive conduct or to have been negligent by reference to events which had not then eventuated. 170 However, this is a different case. The respondents claim at trial, under both causes of action, was that the property did not fall within the range of market value (±15%) as at 3 April 2007 attributed to it by the appellants. The primary judge posed the question as "whether, upon the sales evidence available as of 3 April 2007, a competent valuer could have, using the comparable sales methodology, ascribe a value of $1,600,000" … or "concerning the competency of a valuation of land at a certain point in time", or "whether, at the material time, the valuation was prepared in accordance with due skill … based on sound valuation principles" or "(t)he judgment that needs to be made by the Court in this regard can only be relevantly assisted by a valuation made after the event that itself takes into account the relevant sales evidence that was available to a competent valuer as at the material date of valuation." 171 These descriptions, with respect, seem to me to focus on the appellants' approach or their reasoning process in arriving at the valuation rather than on the relevant question which was as to what was the market value of the property as at 3 April 2007. 172 The case pleaded and run was that, as at that date, the market value of the property was not $1.6 million but was only $1,030,500. That being so, evidence of comparable sales both before and after 3 April 2007 was, in my opinion, relevant and admissible to prove market value as at 3 April 2007. That, it seems to me, is entirely consistent with established case law. 173 As a result of the primary judge ruling to exclude evidence of comparable sales which occurred subsequent to 3 April 2007 the appellants were denied an important plank of their defences. Mr Kish, as the primary judge observed at [143], identified thirteen sales that might be considered comparable and used in the weighted overall assessment process. However, as a result of the ruling, eleven of these were excluded from consideration by the primary judge. This, in my opinion, was an error. I would allow ground 1 in the appeal. The appeal ought be allowed for this reason alone. The orders of the primary judge, including those as to costs, should be set aside and the matter should be remitted to the primary judge for determination in accordance with these reasons. 174 The respondents should pay the appellants' costs of the appeals. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 20 March 2012